Correlation Between Centuria Industrial and Sandfire Resources

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

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

Diversification Opportunities for Centuria Industrial and Sandfire Resources

0.63

Correlation Coefficient

Centuria Industrial  Sandfire Resources

Poor diversification

The 3 months correlation between Centuria and Sandfire is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Centuria Industrial Reit and Sandfire Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources and Centuria Industrial 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 Centuria Industrial Reit 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 Centuria Industrial i.e., Centuria Industrial and Sandfire Resources go up and down completely randomly.

Pair Corralation between Centuria Industrial and Sandfire Resources

Assuming the 90 days trading horizon Centuria Industrial Reit is expected to under-perform the Sandfire Resources. But the stock apears to be less risky and, when comparing its historical volatility, Centuria Industrial Reit is 2.84 times less risky than Sandfire Resources. The stock trades about -0.09 of its potential returns per unit of risk. The Sandfire Resources NL is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,059  in Sandfire Resources NL on December 30, 2024 and sell it today you would earn a total of  21.00  from holding Sandfire Resources NL or generate 1.98% return on investment over 90 days.

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

Centuria Industrial Reit  vs.  Sandfire Resources NL

Centuria Industrial Reit

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Centuria Industrial Reit are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Centuria Industrial 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

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sandfire Resources NL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sandfire Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centuria Industrial and Sandfire Resources

The main advantage of trading using opposite Centuria Industrial and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centuria Industrial 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 Centuria Industrial Reit and Sandfire Resources NL 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.