Correlation Between Sandstorm Gold and Stardust Power

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

Diversification Opportunities for Sandstorm Gold and Stardust Power

0.33

Correlation Coefficient

Sandstorm Gold  Stardust Power

Weak diversification

The 3 months correlation between Sandstorm and Stardust is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Stardust Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stardust Power 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 Stardust Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stardust Power has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Stardust Power go up and down completely randomly.

Pair Corralation between Sandstorm Gold and Stardust Power

Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to under-perform the Stardust Power. But the stock apears to be less risky and, when comparing its historical volatility, Sandstorm Gold Ltd is 6.46 times less risky than Stardust Power. The stock trades about -0.03 of its potential returns per unit of risk. The Stardust Power is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  46.00  in Stardust Power on September 13, 2024 and sell it today you would lose (13.00) from holding Stardust Power or give up 28.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	82.54%
Values	Daily Returns

Sandstorm Gold Ltd  vs.  Stardust Power

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 rather sound basic indicators, Sandstorm Gold is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Stardust Power

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stardust Power are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Stardust Power showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sandstorm Gold and Stardust Power

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

The idea behind Sandstorm Gold Ltd and Stardust Power 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.