Correlation Between Electrovaya Common and Sandstorm Gold

Can any of the company-specific risk be diversified away by investing in both Electrovaya Common and Sandstorm Gold 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 Electrovaya Common and Sandstorm Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electrovaya Common Shares and Sandstorm Gold Ltd, you can compare the effects of market volatilities on Electrovaya Common and Sandstorm Gold 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 Electrovaya Common with a short position of Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrovaya Common and Sandstorm Gold.

Diversification Opportunities for Electrovaya Common and Sandstorm Gold

-0.32

Correlation Coefficient

Electrovaya Common  Sandstorm Gold

Very good diversification

The 3 months correlation between Electrovaya and Sandstorm is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Electrovaya Common Shares and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and Electrovaya Common 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 Electrovaya Common Shares are associated (or correlated) with Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of Electrovaya Common i.e., Electrovaya Common and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Electrovaya Common and Sandstorm Gold

Given the investment horizon of 90 days Electrovaya Common Shares is expected to generate 3.14 times more return on investment than Sandstorm Gold. However, Electrovaya Common is 3.14 times more volatile than Sandstorm Gold Ltd. It trades about -0.03 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about -0.19 per unit of risk. If you would invest  236.00  in Electrovaya Common Shares on September 23, 2024 and sell it today you would lose (18.00) from holding Electrovaya Common Shares or give up 7.63% of portfolio value over 90 days.

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

Electrovaya Common Shares  vs.  Sandstorm Gold Ltd

Electrovaya Common Shares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electrovaya Common Shares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Electrovaya Common is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Sandstorm Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandstorm Gold Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Electrovaya Common and Sandstorm Gold

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

The idea behind Electrovaya Common Shares and Sandstorm Gold Ltd 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.