Correlation Between Cobalt Power and Sandfire Resources

Can any of the company-specific risk be diversified away by investing in both Cobalt Power and Sandfire Resources 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 Cobalt Power and Sandfire Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cobalt Power Group and Sandfire Resources America, you can compare the effects of market volatilities on Cobalt Power and Sandfire Resources 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 Cobalt Power with a short position of Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cobalt Power and Sandfire Resources.

Diversification Opportunities for Cobalt Power and Sandfire Resources

-0.07

Correlation Coefficient

Cobalt Power  Sandfire Resources

Good diversification

The 3 months correlation between Cobalt and Sandfire is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cobalt Power Group and Sandfire Resources America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources and Cobalt Power 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 Cobalt Power Group are associated (or correlated) with Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of Cobalt Power i.e., Cobalt Power and Sandfire Resources go up and down completely randomly.

Pair Corralation between Cobalt Power and Sandfire Resources

Assuming the 90 days horizon Cobalt Power Group is expected to generate 4.47 times more return on investment than Sandfire Resources. However, Cobalt Power is 4.47 times more volatile than Sandfire Resources America. It trades about 0.04 of its potential returns per unit of risk. Sandfire Resources America is currently generating about 0.01 per unit of risk. If you would invest  5.00  in Cobalt Power Group on September 21, 2024 and sell it today you would lose (3.00) from holding Cobalt Power Group or give up 60.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.82%
Values	Daily Returns

Cobalt Power Group  vs.  Sandfire Resources America

Cobalt Power Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cobalt Power Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sandfire Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sandfire Resources America are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sandfire Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cobalt Power and Sandfire Resources

The main advantage of trading using opposite Cobalt Power and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cobalt Power position performs unexpectedly, Sandfire Resources 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.

The idea behind Cobalt Power Group and Sandfire Resources America pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.