Correlation Between Sandfire Resources and Champion Iron
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Champion Iron 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 Champion Iron 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 Champion Iron, you can compare the effects of market volatilities on Sandfire Resources and Champion Iron 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 Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Champion Iron.
Diversification Opportunities for Sandfire Resources and Champion Iron
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sandfire and Champion is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron 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 Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Champion Iron go up and down completely randomly.
Pair Corralation between Sandfire Resources and Champion Iron
Assuming the 90 days trading horizon Sandfire Resources NL is expected to generate 0.65 times more return on investment than Champion Iron. However, Sandfire Resources NL is 1.55 times less risky than Champion Iron. It trades about 0.11 of its potential returns per unit of risk. Champion Iron is currently generating about 0.05 per unit of risk. If you would invest 882.00 in Sandfire Resources NL on September 15, 2024 and sell it today you would earn a total of 114.00 from holding Sandfire Resources NL or generate 12.93% 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. Champion Iron
Performance |
Timeline |
Sandfire Resources |
Champion Iron |
Sandfire Resources and Champion Iron Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sandfire Resources and Champion Iron
The main advantage of trading using opposite Sandfire Resources and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Champion Iron 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 Champion Iron will offset losses from the drop in Champion Iron's long position.Sandfire Resources vs. Premier Investments | Sandfire Resources vs. Aristocrat Leisure | Sandfire Resources vs. Alternative Investment Trust | Sandfire Resources vs. Australian Unity Office |
Champion Iron vs. Northern Star Resources | Champion Iron vs. Evolution Mining | Champion Iron vs. Bluescope Steel | Champion Iron 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data |