Correlation Between Sandstorm Gold and Hurco Companies

Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and Hurco Companies 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 Sandstorm Gold and Hurco Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sandstorm Gold Ltd and Hurco Companies, you can compare the effects of market volatilities on Sandstorm Gold and Hurco Companies 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 Sandstorm Gold with a short position of Hurco Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and Hurco Companies.

Diversification Opportunities for Sandstorm Gold and Hurco Companies

-0.02

Correlation Coefficient

Sandstorm Gold  Hurco Companies

Good diversification

The 3 months correlation between Sandstorm and Hurco is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Hurco Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hurco Companies and Sandstorm Gold 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 Sandstorm Gold Ltd are associated (or correlated) with Hurco Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hurco Companies has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Hurco Companies go up and down completely randomly.

Pair Corralation between Sandstorm Gold and Hurco Companies

Given the investment horizon of 90 days Sandstorm Gold is expected to generate 22.59 times less return on investment than Hurco Companies. But when comparing it to its historical volatility, Sandstorm Gold Ltd is 1.24 times less risky than Hurco Companies. It trades about 0.01 of its potential returns per unit of risk. Hurco Companies is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,720  in Hurco Companies on August 30, 2024 and sell it today you would earn a total of  599.00  from holding Hurco Companies or generate 34.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sandstorm Gold Ltd  vs.  Hurco Companies

Sandstorm Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandstorm Gold Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sandstorm Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Hurco Companies

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hurco Companies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Hurco Companies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sandstorm Gold and Hurco Companies

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

The idea behind Sandstorm Gold Ltd and Hurco Companies 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.