Correlation Between Sandfire Resources and Nevada Sunrise

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

By analyzing existing cross correlation between Sandfire Resources America and Nevada Sunrise Gold, you can compare the effects of market volatilities on Sandfire Resources and Nevada Sunrise 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 Nevada Sunrise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Nevada Sunrise.

Diversification Opportunities for Sandfire Resources and Nevada Sunrise

-0.07

Correlation Coefficient

Sandfire Resources  Nevada Sunrise

Good diversification

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

Pair Corralation between Sandfire Resources and Nevada Sunrise

Assuming the 90 days horizon Sandfire Resources America is expected to under-perform the Nevada Sunrise. But the stock apears to be less risky and, when comparing its historical volatility, Sandfire Resources America is 2.23 times less risky than Nevada Sunrise. The stock trades about 0.0 of its potential returns per unit of risk. The Nevada Sunrise Gold is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Nevada Sunrise Gold on September 30, 2024 and sell it today you would lose (0.50) from holding Nevada Sunrise Gold or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Sandfire Resources America  vs.  Nevada Sunrise Gold

Sandfire Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandfire Resources America has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sandfire Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Nevada Sunrise Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nevada Sunrise Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nevada Sunrise showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sandfire Resources and Nevada Sunrise

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

The idea behind Sandfire Resources America and Nevada Sunrise Gold 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.