Correlation Between ReTo Eco and Sandstorm Gold

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

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

Diversification Opportunities for ReTo Eco and Sandstorm Gold

0.55

Correlation Coefficient

ReTo Eco  Sandstorm Gold

Very weak diversification

The 3 months correlation between ReTo and Sandstorm is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ReTo Eco Solutions and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and ReTo Eco 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 ReTo Eco Solutions 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 ReTo Eco i.e., ReTo Eco and Sandstorm Gold go up and down completely randomly.

Pair Corralation between ReTo Eco and Sandstorm Gold

Given the investment horizon of 90 days ReTo Eco Solutions is expected to under-perform the Sandstorm Gold. In addition to that, ReTo Eco is 1.63 times more volatile than Sandstorm Gold Ltd. It trades about -0.16 of its total potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about -0.13 per unit of volatility. If you would invest  579.00  in Sandstorm Gold Ltd on September 29, 2024 and sell it today you would lose (32.00) from holding Sandstorm Gold Ltd or give up 5.53% of portfolio value over 90 days.

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

ReTo Eco Solutions  vs.  Sandstorm Gold Ltd

ReTo Eco Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ReTo Eco Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 ReTo Eco and Sandstorm Gold

The main advantage of trading using opposite ReTo Eco and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ReTo Eco 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 ReTo Eco Solutions 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.

Check out your portfolio center.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.