Correlation Between Nine Entertainment and Sandfire Resources

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

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

Diversification Opportunities for Nine Entertainment and Sandfire Resources

-0.08

Correlation Coefficient

Nine Entertainment  Sandfire Resources

Good diversification

The 3 months correlation between Nine and Sandfire is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Nine Entertainment Co and Sandfire Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources and Nine Entertainment 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 Nine Entertainment Co 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 Nine Entertainment i.e., Nine Entertainment and Sandfire Resources go up and down completely randomly.

Pair Corralation between Nine Entertainment and Sandfire Resources

Assuming the 90 days trading horizon Nine Entertainment Co is expected to generate 0.43 times more return on investment than Sandfire Resources. However, Nine Entertainment Co is 2.3 times less risky than Sandfire Resources. It trades about -0.09 of its potential returns per unit of risk. Sandfire Resources NL is currently generating about -0.27 per unit of risk. If you would invest  125.00  in Nine Entertainment Co on October 5, 2024 and sell it today you would lose (2.00) from holding Nine Entertainment Co or give up 1.6% of portfolio value over 90 days.

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

Nine Entertainment Co  vs.  Sandfire Resources NL

Nine Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nine Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Nine Entertainment 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

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Nine Entertainment and Sandfire Resources

The main advantage of trading using opposite Nine Entertainment and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Entertainment 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 Nine Entertainment Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.