Correlation Between Solaris Resources and Sibanye Gold
Can any of the company-specific risk be diversified away by investing in both Solaris Resources and Sibanye 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 Solaris Resources and Sibanye Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solaris Resources and Sibanye Gold Ltd, you can compare the effects of market volatilities on Solaris Resources and Sibanye 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 Solaris Resources with a short position of Sibanye Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solaris Resources and Sibanye Gold.
Diversification Opportunities for Solaris Resources and Sibanye Gold
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Solaris and Sibanye is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Solaris Resources and Sibanye Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sibanye Gold and Solaris 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 Solaris Resources are associated (or correlated) with Sibanye Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sibanye Gold has no effect on the direction of Solaris Resources i.e., Solaris Resources and Sibanye Gold go up and down completely randomly.
Pair Corralation between Solaris Resources and Sibanye Gold
Given the investment horizon of 90 days Solaris Resources is expected to generate 1.02 times more return on investment than Sibanye Gold. However, Solaris Resources is 1.02 times more volatile than Sibanye Gold Ltd. It trades about 0.04 of its potential returns per unit of risk. Sibanye Gold Ltd is currently generating about 0.0 per unit of risk. If you would invest 301.00 in Solaris Resources on November 9, 2024 and sell it today you would earn a total of 66.00 from holding Solaris Resources or generate 21.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solaris Resources vs. Sibanye Gold Ltd
Performance |
| Timeline |
| Solaris Resources |
| Sibanye Gold |
Solaris Resources and Sibanye Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solaris Resources and Sibanye Gold
The main advantage of trading using opposite Solaris Resources and Sibanye Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solaris Resources position performs unexpectedly, Sibanye 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 Sibanye Gold will offset losses from the drop in Sibanye Gold's long position.| Solaris Resources vs. Torm PLC Class | Solaris Resources vs. United Airlines Holdings | Solaris Resources vs. 51Talk Online Education | Solaris Resources vs. Mesa Air Group |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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