Correlation Between Sandfire Resources and HYATT HOTELS

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

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

Diversification Opportunities for Sandfire Resources and HYATT HOTELS

-0.22

Correlation Coefficient

Sandfire Resources  HYATT HOTELS

Very good diversification

The 3 months correlation between Sandfire and HYATT is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources Limited and HYATT HOTELS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYATT HOTELS A and Sandfire Resources 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 Sandfire Resources Limited are associated (or correlated) with HYATT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYATT HOTELS A has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and HYATT HOTELS go up and down completely randomly.

Pair Corralation between Sandfire Resources and HYATT HOTELS

Assuming the 90 days horizon Sandfire Resources Limited is expected to under-perform the HYATT HOTELS. In addition to that, Sandfire Resources is 1.5 times more volatile than HYATT HOTELS A. It trades about -0.31 of its total potential returns per unit of risk. HYATT HOTELS A is currently generating about -0.02 per unit of volatility. If you would invest  15,200  in HYATT HOTELS A on October 5, 2024 and sell it today you would lose (110.00) from holding HYATT HOTELS A or give up 0.72% of portfolio value over 90 days.

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

Sandfire Resources Limited  vs.  HYATT HOTELS A

Sandfire Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandfire Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

HYATT HOTELS A

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days HYATT HOTELS A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, HYATT HOTELS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sandfire Resources and HYATT HOTELS

The main advantage of trading using opposite Sandfire Resources and HYATT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, HYATT HOTELS 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 HYATT HOTELS will offset losses from the drop in HYATT HOTELS's long position.

The idea behind Sandfire Resources Limited and HYATT HOTELS A 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .