Correlation Between Sandfire Resources and Hub24

Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Hub24 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 Hub24 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sandfire Resources NL and Hub24, you can compare the effects of market volatilities on Sandfire Resources and Hub24 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 Hub24. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Hub24.

Diversification Opportunities for Sandfire Resources and Hub24

-0.49

Correlation Coefficient

Sandfire Resources  Hub24

Very good diversification

The 3 months correlation between Sandfire and Hub24 is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Hub24 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub24 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 NL are associated (or correlated) with Hub24. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub24 has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Hub24 go up and down completely randomly.

Pair Corralation between Sandfire Resources and Hub24

Assuming the 90 days trading horizon Sandfire Resources NL is expected to under-perform the Hub24. In addition to that, Sandfire Resources is 1.01 times more volatile than Hub24. It trades about -0.28 of its total potential returns per unit of risk. Hub24 is currently generating about -0.18 per unit of volatility. If you would invest  7,525  in Hub24 on October 4, 2024 and sell it today you would lose (565.00) from holding Hub24 or give up 7.51% of portfolio value over 90 days.

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

Sandfire Resources NL  vs.  Hub24

Sandfire Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandfire Resources NL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Hub24

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hub24 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Hub24 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sandfire Resources and Hub24

The main advantage of trading using opposite Sandfire Resources and Hub24 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Hub24 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 Hub24 will offset losses from the drop in Hub24's long position.

The idea behind Sandfire Resources NL and Hub24 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.