Correlation Between Sandfire Resources and Pact Group
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Pact Group 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 Pact Group 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 Pact Group Holdings, you can compare the effects of market volatilities on Sandfire Resources and Pact Group 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 Pact Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Pact Group.
Diversification Opportunities for Sandfire Resources and Pact Group
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sandfire and Pact is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Pact Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pact Group Holdings 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 Pact Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pact Group Holdings has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Pact Group go up and down completely randomly.
Pair Corralation between Sandfire Resources and Pact Group
Assuming the 90 days trading horizon Sandfire Resources NL is expected to generate 0.8 times more return on investment than Pact Group. However, Sandfire Resources NL is 1.25 times less risky than Pact Group. It trades about 0.01 of its potential returns per unit of risk. Pact Group Holdings is currently generating about -0.08 per unit of risk. If you would invest 1,037 in Sandfire Resources NL on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Sandfire Resources NL or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sandfire Resources NL vs. Pact Group Holdings
Performance |
| Timeline |
| Sandfire Resources |
| Pact Group Holdings |
Sandfire Resources and Pact Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Pact Group
The main advantage of trading using opposite Sandfire Resources and Pact Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Pact Group 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 Pact Group will offset losses from the drop in Pact Group's long position.| Sandfire Resources vs. Readytech Holdings | Sandfire Resources vs. Thorney Technologies | Sandfire Resources vs. TTG Fintech | Sandfire Resources vs. BTC Health Limited |
| Pact Group vs. Northern Star Resources | Pact Group vs. Evolution Mining | Pact Group vs. Bluescope Steel | Pact Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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