Correlation Between Peel Mining and Sandfire Resources

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

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

Diversification Opportunities for Peel Mining and Sandfire Resources

0.2

Correlation Coefficient

Peel Mining  Sandfire Resources

Modest diversification

The 3 months correlation between Peel and Sandfire is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Peel Mining and Sandfire Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources and Peel Mining 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 Peel Mining 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 Peel Mining i.e., Peel Mining and Sandfire Resources go up and down completely randomly.

Pair Corralation between Peel Mining and Sandfire Resources

Assuming the 90 days trading horizon Peel Mining is expected to generate 1.89 times more return on investment than Sandfire Resources. However, Peel Mining is 1.89 times more volatile than Sandfire Resources NL. It trades about 0.02 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  12.00  in Peel Mining on October 5, 2024 and sell it today you would earn a total of  0.00  from holding Peel Mining or generate 0.0% return on investment over 90 days.

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

Peel Mining  vs.  Sandfire Resources NL

Peel Mining

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Peel Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Peel Mining 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 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 Peel Mining and Sandfire Resources

The main advantage of trading using opposite Peel Mining and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peel Mining 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 Peel Mining 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.