Correlation Between Sandfire Resources and Bisalloy Steel
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Bisalloy Steel 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 Bisalloy Steel 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 Bisalloy Steel Group, you can compare the effects of market volatilities on Sandfire Resources and Bisalloy Steel 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 Bisalloy Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Bisalloy Steel.
Diversification Opportunities for Sandfire Resources and Bisalloy Steel
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sandfire and Bisalloy is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Bisalloy Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisalloy Steel Group 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 Bisalloy Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisalloy Steel Group has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Bisalloy Steel go up and down completely randomly.
Pair Corralation between Sandfire Resources and Bisalloy Steel
Assuming the 90 days trading horizon Sandfire Resources NL is expected to under-perform the Bisalloy Steel. But the stock apears to be less risky and, when comparing its historical volatility, Sandfire Resources NL is 4.6 times less risky than Bisalloy Steel. The stock trades about -0.19 of its potential returns per unit of risk. The Bisalloy Steel Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 309.00 in Bisalloy Steel Group on August 29, 2024 and sell it today you would earn a total of 66.00 from holding Bisalloy Steel Group or generate 21.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandfire Resources NL vs. Bisalloy Steel Group
Performance |
| Timeline |
| Sandfire Resources |
| Bisalloy Steel Group |
Sandfire Resources and Bisalloy Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Bisalloy Steel
The main advantage of trading using opposite Sandfire Resources and Bisalloy Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Bisalloy Steel 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 Bisalloy Steel will offset losses from the drop in Bisalloy Steel'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 |
| Bisalloy Steel vs. Red Hill Iron | Bisalloy Steel vs. Ironbark Capital | Bisalloy Steel vs. Readytech Holdings | Bisalloy Steel vs. TTG Fintech |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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