Correlation Between Sandfire Resources and ELEMENT 29

Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and ELEMENT 29 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 ELEMENT 29 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 ELEMENT 29 RESOURCES, you can compare the effects of market volatilities on Sandfire Resources and ELEMENT 29 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 ELEMENT 29. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and ELEMENT 29.

Diversification Opportunities for Sandfire Resources and ELEMENT 29

-0.64

Correlation Coefficient

Sandfire Resources  ELEMENT 29

Excellent diversification

The 3 months correlation between Sandfire and ELEMENT is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources Limited and ELEMENT 29 RESOURCES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELEMENT 29 RESOURCES 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 ELEMENT 29. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELEMENT 29 RESOURCES has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and ELEMENT 29 go up and down completely randomly.

Pair Corralation between Sandfire Resources and ELEMENT 29

Assuming the 90 days horizon Sandfire Resources Limited is expected to generate 0.32 times more return on investment than ELEMENT 29. However, Sandfire Resources Limited is 3.12 times less risky than ELEMENT 29. It trades about 0.15 of its potential returns per unit of risk. ELEMENT 29 RESOURCES is currently generating about -0.06 per unit of risk. If you would invest  560.00  in Sandfire Resources Limited on December 22, 2024 and sell it today you would earn a total of  105.00  from holding Sandfire Resources Limited or generate 18.75% return on investment over 90 days.

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

Sandfire Resources Limited  vs.  ELEMENT 29 RESOURCES

Sandfire Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sandfire Resources Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sandfire Resources reported solid returns over the last few months and may actually be approaching a breakup point.

ELEMENT 29 RESOURCES

Risk-Adjusted Performance

Very Weak

Over the last 90 days ELEMENT 29 RESOURCES 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sandfire Resources and ELEMENT 29

The main advantage of trading using opposite Sandfire Resources and ELEMENT 29 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, ELEMENT 29 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 ELEMENT 29 will offset losses from the drop in ELEMENT 29's long position.

The idea behind Sandfire Resources Limited and ELEMENT 29 RESOURCES 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.