Correlation Between Sandfire Resources and Talisman Mining
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Talisman 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 Talisman 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 Talisman Mining, you can compare the effects of market volatilities on Sandfire Resources and Talisman 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 Talisman Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Talisman Mining.
Diversification Opportunities for Sandfire Resources and Talisman Mining
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sandfire and Talisman is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Talisman Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talisman 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 Talisman Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talisman Mining has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Talisman Mining go up and down completely randomly.
Pair Corralation between Sandfire Resources and Talisman Mining
Assuming the 90 days trading horizon Sandfire Resources NL is expected to generate 0.5 times more return on investment than Talisman Mining. However, Sandfire Resources NL is 2.02 times less risky than Talisman Mining. It trades about 0.14 of its potential returns per unit of risk. Talisman Mining is currently generating about 0.05 per unit of risk. If you would invest 855.00 in Sandfire Resources NL on August 29, 2024 and sell it today you would earn a total of 162.00 from holding Sandfire Resources NL or generate 18.95% 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. Talisman Mining
Performance |
| Timeline |
| Sandfire Resources |
| Talisman Mining |
Sandfire Resources and Talisman Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Talisman Mining
The main advantage of trading using opposite Sandfire Resources and Talisman Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Talisman 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 Talisman Mining will offset losses from the drop in Talisman Mining's long position.| Sandfire Resources vs. Pinnacle Investment Management | Sandfire Resources vs. Bio Gene Technology | Sandfire Resources vs. Macquarie Technology Group | Sandfire Resources vs. Computershare |
| Talisman Mining vs. Northern Star Resources | Talisman Mining vs. Evolution Mining | Talisman Mining vs. Bluescope Steel | Talisman Mining 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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