Correlation Between Sandfire Resources and Mindax

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

Diversification Opportunities for Sandfire Resources and Mindax

-0.09

Correlation Coefficient

Sandfire Resources  Mindax

Good diversification

The 3 months correlation between Sandfire and Mindax is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Mindax Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mindax Limited 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 Mindax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mindax Limited has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Mindax go up and down completely randomly.

Pair Corralation between Sandfire Resources and Mindax

Assuming the 90 days trading horizon Sandfire Resources NL is expected to under-perform the Mindax. But the stock apears to be less risky and, when comparing its historical volatility, Sandfire Resources NL is 2.71 times less risky than Mindax. The stock trades about -0.25 of its potential returns per unit of risk. The Mindax Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4.15  in Mindax Limited on September 23, 2024 and sell it today you would lose (0.15) from holding Mindax Limited or give up 3.61% of portfolio value over 90 days.

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

Sandfire Resources NL  vs.  Mindax Limited

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 comparatively stable basic indicators, Sandfire Resources is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Mindax Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mindax Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mindax is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sandfire Resources and Mindax

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

The idea behind Sandfire Resources NL and Mindax Limited 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.