Correlation Between Slam Exploration and Sandfire Resources

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

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

Diversification Opportunities for Slam Exploration and Sandfire Resources

-0.1

Correlation Coefficient

Slam Exploration  Sandfire Resources

Good diversification

The 3 months correlation between Slam and Sandfire is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Slam Exploration and Sandfire Resources America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources and Slam Exploration 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 Slam Exploration 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 Slam Exploration i.e., Slam Exploration and Sandfire Resources go up and down completely randomly.

Pair Corralation between Slam Exploration and Sandfire Resources

Assuming the 90 days horizon Slam Exploration is expected to generate 2.31 times more return on investment than Sandfire Resources. However, Slam Exploration is 2.31 times more volatile than Sandfire Resources America. It trades about 0.03 of its potential returns per unit of risk. Sandfire Resources America is currently generating about 0.04 per unit of risk. If you would invest  4.00  in Slam Exploration on September 21, 2024 and sell it today you would lose (1.00) from holding Slam Exploration or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Slam Exploration  vs.  Sandfire Resources America

Slam Exploration

Risk-Adjusted Performance

2 of 100

Weak

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

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 Slam Exploration and Sandfire Resources

The main advantage of trading using opposite Slam Exploration and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Slam Exploration 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 Slam Exploration 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.