Correlation Between Sandfire Resources and Rand Mining
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Rand Mining 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 Rand Mining 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 Rand Mining, you can compare the effects of market volatilities on Sandfire Resources and Rand Mining 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 Rand Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Rand Mining.
Diversification Opportunities for Sandfire Resources and Rand Mining
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sandfire and Rand is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Rand Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rand 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 Rand Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rand Mining has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Rand Mining go up and down completely randomly.
Pair Corralation between Sandfire Resources and Rand Mining
Assuming the 90 days trading horizon Sandfire Resources NL is expected to generate 0.58 times more return on investment than Rand Mining. However, Sandfire Resources NL is 1.72 times less risky than Rand Mining. It trades about 0.0 of its potential returns per unit of risk. Rand Mining is currently generating about -0.15 per unit of risk. If you would invest 1,016 in Sandfire Resources NL on October 25, 2024 and sell it today you would lose (4.00) from holding Sandfire Resources NL or give up 0.39% 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. Rand Mining
Performance |
| Timeline |
| Sandfire Resources |
| Rand Mining |
Sandfire Resources and Rand Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Rand Mining
The main advantage of trading using opposite Sandfire Resources and Rand Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Rand Mining 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 Rand Mining will offset losses from the drop in Rand Mining's long position.| Sandfire Resources vs. Dexus Convenience Retail | Sandfire Resources vs. Nufarm Finance NZ | Sandfire Resources vs. Apiam Animal Health | Sandfire Resources vs. K2 Asset Management |
| Rand Mining vs. Group 6 Metals | Rand Mining vs. Sports Entertainment Group | Rand Mining vs. Australian Unity Office | Rand Mining vs. Land Homes Group |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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