Correlation Between Health and Sandfire Resources

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

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

Diversification Opportunities for Health and Sandfire Resources

0.0

Correlation Coefficient

Health  Sandfire Resources

Pay attention - limited upside

The 3 months correlation between Health and Sandfire is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Health and Plant and Sandfire Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources and Health 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 Health and Plant 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 Health i.e., Health and Sandfire Resources go up and down completely randomly.

Pair Corralation between Health and Sandfire Resources

If you would invest  939.00  in Sandfire Resources NL on December 28, 2024 and sell it today you would earn a total of  178.00  from holding Sandfire Resources NL or generate 18.96% return on investment over 90 days.

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

Health and Plant  vs.  Sandfire Resources NL

Health and Plant

Risk-Adjusted Performance

Very Weak

Over the last 90 days Health and Plant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Health 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

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sandfire Resources NL are ranked lower than 11 (%) 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 Health and Sandfire Resources

The main advantage of trading using opposite Health and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health 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 Health and Plant 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.