Correlation Between Sandfire Resources and Kalgoorlie Gold
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Kalgoorlie Gold 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 Kalgoorlie Gold 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 Kalgoorlie Gold Mining, you can compare the effects of market volatilities on Sandfire Resources and Kalgoorlie Gold 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 Kalgoorlie Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Kalgoorlie Gold.
Diversification Opportunities for Sandfire Resources and Kalgoorlie Gold
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sandfire and Kalgoorlie is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Kalgoorlie Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalgoorlie Gold Mining 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 Kalgoorlie Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalgoorlie Gold Mining has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Kalgoorlie Gold go up and down completely randomly.
Pair Corralation between Sandfire Resources and Kalgoorlie Gold
Assuming the 90 days trading horizon Sandfire Resources NL is expected to generate 0.36 times more return on investment than Kalgoorlie Gold. However, Sandfire Resources NL is 2.75 times less risky than Kalgoorlie Gold. It trades about 0.05 of its potential returns per unit of risk. Kalgoorlie Gold Mining is currently generating about -0.02 per unit of risk. If you would invest 625.00 in Sandfire Resources NL on October 13, 2024 and sell it today you would earn a total of 356.00 from holding Sandfire Resources NL or generate 56.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandfire Resources NL vs. Kalgoorlie Gold Mining
Performance |
| Timeline |
| Sandfire Resources |
| Kalgoorlie Gold Mining |
Sandfire Resources and Kalgoorlie Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Kalgoorlie Gold
The main advantage of trading using opposite Sandfire Resources and Kalgoorlie Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Kalgoorlie Gold 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 Kalgoorlie Gold will offset losses from the drop in Kalgoorlie Gold's long position.| Sandfire Resources vs. Homeco Daily Needs | Sandfire Resources vs. Hudson Investment Group | Sandfire Resources vs. Westpac Banking | Sandfire Resources vs. Commonwealth Bank of |
| Kalgoorlie Gold vs. Northern Star Resources | Kalgoorlie Gold vs. Evolution Mining | Kalgoorlie Gold vs. Bluescope Steel | Kalgoorlie Gold vs. De Grey Mining |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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