Correlation Between Sandfire Resources and Centaurus Metals
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Centaurus Metals 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 Centaurus Metals 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 Centaurus Metals, you can compare the effects of market volatilities on Sandfire Resources and Centaurus Metals 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 Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Centaurus Metals.
Diversification Opportunities for Sandfire Resources and Centaurus Metals
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sandfire and Centaurus is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Centaurus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals 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 Centaurus Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaurus Metals has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Centaurus Metals go up and down completely randomly.
Pair Corralation between Sandfire Resources and Centaurus Metals
Assuming the 90 days trading horizon Sandfire Resources is expected to generate 2.03 times less return on investment than Centaurus Metals. But when comparing it to its historical volatility, Sandfire Resources NL is 2.33 times less risky than Centaurus Metals. It trades about 0.1 of its potential returns per unit of risk. Centaurus Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Centaurus Metals on August 25, 2024 and sell it today you would earn a total of 8.00 from holding Centaurus Metals or generate 22.86% 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. Centaurus Metals
Performance |
| Timeline |
| Sandfire Resources |
| Centaurus Metals |
Sandfire Resources and Centaurus Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Centaurus Metals
The main advantage of trading using opposite Sandfire Resources and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Centaurus Metals 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 Centaurus Metals will offset losses from the drop in Centaurus Metals' long position.| Sandfire Resources vs. Hudson Investment Group | Sandfire Resources vs. Argo Investments | Sandfire Resources vs. Regal Investment | Sandfire Resources vs. Spirit Telecom |
| Centaurus Metals vs. Northern Star Resources | Centaurus Metals vs. Evolution Mining | Centaurus Metals vs. Bluescope Steel | Centaurus Metals vs. Sandfire Resources NL |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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