Correlation Between Genesis Minerals and Sandfire Resources

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

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

Diversification Opportunities for Genesis Minerals and Sandfire Resources

-0.29

Correlation Coefficient

Genesis Minerals  Sandfire Resources

Very good diversification

The 3 months correlation between Genesis and Sandfire is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Genesis Minerals and Sandfire Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources and Genesis Minerals 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 Genesis Minerals 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 Genesis Minerals i.e., Genesis Minerals and Sandfire Resources go up and down completely randomly.

Pair Corralation between Genesis Minerals and Sandfire Resources

Assuming the 90 days trading horizon Genesis Minerals is expected to generate 1.42 times more return on investment than Sandfire Resources. However, Genesis Minerals is 1.42 times more volatile than Sandfire Resources NL. It trades about 0.11 of its potential returns per unit of risk. Sandfire Resources NL is currently generating about 0.01 per unit of risk. If you would invest  211.00  in Genesis Minerals on September 22, 2024 and sell it today you would earn a total of  39.00  from holding Genesis Minerals or generate 18.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Genesis Minerals  vs.  Sandfire Resources NL

Genesis Minerals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Minerals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Genesis Minerals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sandfire Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Genesis Minerals and Sandfire Resources

The main advantage of trading using opposite Genesis Minerals and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genesis Minerals 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 Genesis Minerals 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.