Correlation Between Big Ridge and Sailfish Royalty

Can any of the company-specific risk be diversified away by investing in both Big Ridge and Sailfish Royalty 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 Big Ridge and Sailfish Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Big Ridge Gold and Sailfish Royalty Corp, you can compare the effects of market volatilities on Big Ridge and Sailfish Royalty 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 Big Ridge with a short position of Sailfish Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Ridge and Sailfish Royalty.

Diversification Opportunities for Big Ridge and Sailfish Royalty

0.63

Correlation Coefficient

Big Ridge  Sailfish Royalty

Poor diversification

The 3 months correlation between Big and Sailfish is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Big Ridge Gold and Sailfish Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sailfish Royalty Corp and Big Ridge 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 Big Ridge Gold are associated (or correlated) with Sailfish Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sailfish Royalty Corp has no effect on the direction of Big Ridge i.e., Big Ridge and Sailfish Royalty go up and down completely randomly.

Pair Corralation between Big Ridge and Sailfish Royalty

Assuming the 90 days horizon Big Ridge is expected to generate 1.3 times less return on investment than Sailfish Royalty. In addition to that, Big Ridge is 2.22 times more volatile than Sailfish Royalty Corp. It trades about 0.02 of its total potential returns per unit of risk. Sailfish Royalty Corp is currently generating about 0.06 per unit of volatility. If you would invest  93.00  in Sailfish Royalty Corp on October 26, 2024 and sell it today you would earn a total of  3.00  from holding Sailfish Royalty Corp or generate 3.23% return on investment over 90 days.

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

Big Ridge Gold  vs.  Sailfish Royalty Corp

Big Ridge Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big Ridge Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sailfish Royalty Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sailfish Royalty Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Big Ridge and Sailfish Royalty

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

The idea behind Big Ridge Gold and Sailfish Royalty Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.