Correlation Between Sandfire Resources and Lindian Resources
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Lindian Resources 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 Lindian Resources 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 Lindian Resources, you can compare the effects of market volatilities on Sandfire Resources and Lindian Resources 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 Lindian Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Lindian Resources.
Diversification Opportunities for Sandfire Resources and Lindian Resources
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sandfire and Lindian is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Lindian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindian Resources 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 Lindian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindian Resources has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Lindian Resources go up and down completely randomly.
Pair Corralation between Sandfire Resources and Lindian Resources
Assuming the 90 days trading horizon Sandfire Resources NL is expected to under-perform the Lindian Resources. But the stock apears to be less risky and, when comparing its historical volatility, Sandfire Resources NL is 2.45 times less risky than Lindian Resources. The stock trades about -0.09 of its potential returns per unit of risk. The Lindian Resources is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Lindian Resources on October 20, 2024 and sell it today you would lose (0.20) from holding Lindian Resources or give up 2.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandfire Resources NL vs. Lindian Resources
Performance |
| Timeline |
| Sandfire Resources |
| Lindian Resources |
Sandfire Resources and Lindian Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Lindian Resources
The main advantage of trading using opposite Sandfire Resources and Lindian Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Lindian Resources 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 Lindian Resources will offset losses from the drop in Lindian Resources' long position.| Sandfire Resources vs. Premier Investments | Sandfire Resources vs. Advanced Braking Technology | Sandfire Resources vs. Thorney Technologies | Sandfire Resources vs. Hutchison Telecommunications |
| Lindian Resources vs. Black Rock Mining | Lindian Resources vs. Aeon Metals | Lindian Resources vs. Hammer Metals | Lindian Resources vs. 29Metals |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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