Correlation Between Sandfire Resources and Intel

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

Diversification Opportunities for Sandfire Resources and Intel

0.3

Correlation Coefficient

Sandfire Resources  Intel

Weak diversification

The 3 months correlation between Sandfire and Intel is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources Limited and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Intel go up and down completely randomly.

Pair Corralation between Sandfire Resources and Intel

Assuming the 90 days horizon Sandfire Resources Limited is expected to generate 0.62 times more return on investment than Intel. However, Sandfire Resources Limited is 1.6 times less risky than Intel. It trades about -0.16 of its potential returns per unit of risk. Intel is currently generating about -0.22 per unit of risk. If you would invest  625.00  in Sandfire Resources Limited on September 19, 2024 and sell it today you would lose (45.00) from holding Sandfire Resources Limited or give up 7.2% of portfolio value over 90 days.

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

Sandfire Resources Limited  vs.  Intel

Sandfire Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sandfire Resources Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sandfire Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Intel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Intel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sandfire Resources and Intel

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

The idea behind Sandfire Resources Limited and Intel 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.