Correlation Between Sandfire Resources and KENEDIX OFFICE

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

Diversification Opportunities for Sandfire Resources and KENEDIX OFFICE

0.43

Correlation Coefficient

Sandfire Resources  KENEDIX OFFICE

Very weak diversification

The 3 months correlation between Sandfire and KENEDIX is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources Limited and KENEDIX OFFICE INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENEDIX OFFICE INV 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 KENEDIX OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENEDIX OFFICE INV has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and KENEDIX OFFICE go up and down completely randomly.

Pair Corralation between Sandfire Resources and KENEDIX OFFICE

Assuming the 90 days horizon Sandfire Resources Limited is expected to under-perform the KENEDIX OFFICE. In addition to that, Sandfire Resources is 2.24 times more volatile than KENEDIX OFFICE INV. It trades about -0.3 of its total potential returns per unit of risk. KENEDIX OFFICE INV is currently generating about -0.14 per unit of volatility. If you would invest  91,000  in KENEDIX OFFICE INV on October 4, 2024 and sell it today you would lose (2,500) from holding KENEDIX OFFICE INV or give up 2.75% of portfolio value over 90 days.

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

Sandfire Resources Limited  vs.  KENEDIX OFFICE INV

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.

KENEDIX OFFICE INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KENEDIX OFFICE INV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, KENEDIX OFFICE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sandfire Resources and KENEDIX OFFICE

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

The idea behind Sandfire Resources Limited and KENEDIX OFFICE INV 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.