Correlation Between BANK HANDLOWY and Sandfire Resources

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

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

Diversification Opportunities for BANK HANDLOWY and Sandfire Resources

-0.36

Correlation Coefficient

BANK HANDLOWY  Sandfire Resources

Very good diversification

The 3 months correlation between BANK and Sandfire is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding BANK HANDLOWY and Sandfire Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources and BANK HANDLOWY 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 BANK HANDLOWY 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 BANK HANDLOWY i.e., BANK HANDLOWY and Sandfire Resources go up and down completely randomly.

Pair Corralation between BANK HANDLOWY and Sandfire Resources

Assuming the 90 days trading horizon BANK HANDLOWY is expected to under-perform the Sandfire Resources. But the stock apears to be less risky and, when comparing its historical volatility, BANK HANDLOWY is 2.83 times less risky than Sandfire Resources. The stock trades about -0.04 of its potential returns per unit of risk. The Sandfire Resources Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  540.00  in Sandfire Resources Limited on September 20, 2024 and sell it today you would earn a total of  40.00  from holding Sandfire Resources Limited or generate 7.41% return on investment over 90 days.

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

BANK HANDLOWY  vs.  Sandfire Resources Limited

BANK HANDLOWY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK HANDLOWY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BANK HANDLOWY is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sandfire Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sandfire Resources Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sandfire Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BANK HANDLOWY and Sandfire Resources

The main advantage of trading using opposite BANK HANDLOWY and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK HANDLOWY 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 BANK HANDLOWY and Sandfire Resources Limited 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.