Correlation Between Sandstorm Gold and SSR Mining

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

Diversification Opportunities for Sandstorm Gold and SSR Mining

-0.19

Correlation Coefficient

Sandstorm Gold  SSR Mining

Good diversification

The 3 months correlation between Sandstorm and SSR is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and SSR Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSR Mining 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 SSR Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSR Mining has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and SSR Mining go up and down completely randomly.

Pair Corralation between Sandstorm Gold and SSR Mining

Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to generate 0.6 times more return on investment than SSR Mining. However, Sandstorm Gold Ltd is 1.65 times less risky than SSR Mining. It trades about -0.09 of its potential returns per unit of risk. SSR Mining is currently generating about -0.15 per unit of risk. If you would invest  586.00  in Sandstorm Gold Ltd on October 12, 2024 and sell it today you would lose (17.00) from holding Sandstorm Gold Ltd or give up 2.9% 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.  SSR Mining

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SSR Mining

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SSR Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, SSR Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sandstorm Gold and SSR Mining

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

The idea behind Sandstorm Gold Ltd and SSR Mining 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .