Correlation Between Sandstorm Gold and Electrovaya Common

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

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

Diversification Opportunities for Sandstorm Gold and Electrovaya Common

-0.32

Correlation Coefficient

Sandstorm Gold  Electrovaya Common

Very good diversification

The 3 months correlation between Sandstorm and Electrovaya is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares and Sandstorm Gold 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 Sandstorm Gold Ltd are associated (or correlated) with Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Electrovaya Common go up and down completely randomly.

Pair Corralation between Sandstorm Gold and Electrovaya Common

Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to under-perform the Electrovaya Common. But the stock apears to be less risky and, when comparing its historical volatility, Sandstorm Gold Ltd is 3.14 times less risky than Electrovaya Common. The stock trades about -0.19 of its potential returns per unit of risk. The Electrovaya Common Shares is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  236.00  in Electrovaya Common Shares on September 23, 2024 and sell it today you would lose (18.00) from holding Electrovaya Common Shares or give up 7.63% of portfolio value over 90 days.

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

Sandstorm Gold Ltd  vs.  Electrovaya Common Shares

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.

Electrovaya Common Shares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electrovaya Common Shares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Electrovaya Common is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sandstorm Gold and Electrovaya Common

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

The idea behind Sandstorm Gold Ltd and Electrovaya Common Shares 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.