Correlation Between Sandon Capital and Challenger
Can any of the company-specific risk be diversified away by investing in both Sandon Capital and Challenger 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 Sandon Capital and Challenger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandon Capital Investments and Challenger, you can compare the effects of market volatilities on Sandon Capital and Challenger 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 Sandon Capital with a short position of Challenger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandon Capital and Challenger.
Diversification Opportunities for Sandon Capital and Challenger
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sandon and Challenger is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sandon Capital Investments and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger and Sandon Capital 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 Sandon Capital Investments are associated (or correlated) with Challenger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Challenger has no effect on the direction of Sandon Capital i.e., Sandon Capital and Challenger go up and down completely randomly.
Pair Corralation between Sandon Capital and Challenger
Assuming the 90 days trading horizon Sandon Capital Investments is expected to generate 0.84 times more return on investment than Challenger. However, Sandon Capital Investments is 1.19 times less risky than Challenger. It trades about 0.06 of its potential returns per unit of risk. Challenger is currently generating about 0.02 per unit of risk. If you would invest 69.00 in Sandon Capital Investments on September 3, 2024 and sell it today you would earn a total of 8.00 from holding Sandon Capital Investments or generate 11.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.33% |
| Values | Daily Returns |
Sandon Capital Investments vs. Challenger
Performance |
| Timeline |
| Sandon Capital Inves |
| Challenger |
Sandon Capital and Challenger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandon Capital and Challenger
The main advantage of trading using opposite Sandon Capital and Challenger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandon Capital position performs unexpectedly, Challenger 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 Challenger will offset losses from the drop in Challenger's long position.| Sandon Capital vs. GQG Partners DRC | Sandon Capital vs. BKI Investment | Sandon Capital vs. Australian United Investment |
| Challenger vs. Fisher Paykel Healthcare | Challenger vs. Aurelia Metals | Challenger vs. Apiam Animal Health | Challenger vs. DY6 Metals |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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