Correlation Between ICC Holdings and Sandstorm Gold

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

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

Diversification Opportunities for ICC Holdings and Sandstorm Gold

-0.44

Correlation Coefficient

ICC Holdings  Sandstorm Gold

Very good diversification

The 3 months correlation between ICC and Sandstorm is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding ICC Holdings and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and ICC Holdings 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 ICC Holdings 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 ICC Holdings i.e., ICC Holdings and Sandstorm Gold go up and down completely randomly.

Pair Corralation between ICC Holdings and Sandstorm Gold

Given the investment horizon of 90 days ICC Holdings is expected to generate 0.43 times more return on investment than Sandstorm Gold. However, ICC Holdings is 2.3 times less risky than Sandstorm Gold. It trades about 0.05 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about -0.14 per unit of risk. If you would invest  2,325  in ICC Holdings on September 27, 2024 and sell it today you would earn a total of  18.00  from holding ICC Holdings or generate 0.77% return on investment over 90 days.

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

ICC Holdings  vs.  Sandstorm Gold Ltd

ICC Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICC Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, ICC Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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 ICC Holdings and Sandstorm Gold

The main advantage of trading using opposite ICC Holdings and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICC Holdings 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 ICC Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.