Correlation Between Sandfire Resources and Black Cat
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Black Cat at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sandfire Resources and Black Cat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandfire Resources NL and Black Cat Syndicate, you can compare the effects of market volatilities on Sandfire Resources and Black Cat and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sandfire Resources with a short position of Black Cat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Black Cat.
Diversification Opportunities for Sandfire Resources and Black Cat
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sandfire and Black is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Black Cat Syndicate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Cat Syndicate and Sandfire Resources is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sandfire Resources NL are associated (or correlated) with Black Cat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Cat Syndicate has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Black Cat go up and down completely randomly.
Pair Corralation between Sandfire Resources and Black Cat
Assuming the 90 days trading horizon Sandfire Resources NL is expected to under-perform the Black Cat. But the stock apears to be less risky and, when comparing its historical volatility, Sandfire Resources NL is 3.68 times less risky than Black Cat. The stock trades about -0.19 of its potential returns per unit of risk. The Black Cat Syndicate is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Black Cat Syndicate on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Black Cat Syndicate or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandfire Resources NL vs. Black Cat Syndicate
Performance |
| Timeline |
| Sandfire Resources |
| Black Cat Syndicate |
Sandfire Resources and Black Cat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Black Cat
The main advantage of trading using opposite Sandfire Resources and Black Cat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Black Cat can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Black Cat will offset losses from the drop in Black Cat's long position.| Sandfire Resources vs. Pinnacle Investment Management | Sandfire Resources vs. Bio Gene Technology | Sandfire Resources vs. Macquarie Technology Group | Sandfire Resources vs. Computershare |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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