Correlation Between Sandfire Resources and SG Fleet

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

Diversification Opportunities for Sandfire Resources and SG Fleet

-0.54

Correlation Coefficient

Sandfire Resources  SG Fleet

Excellent diversification

The 3 months correlation between Sandfire and SGF is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and SG Fleet Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SG Fleet Group 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 SG Fleet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SG Fleet Group has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and SG Fleet go up and down completely randomly.

Pair Corralation between Sandfire Resources and SG Fleet

Assuming the 90 days trading horizon Sandfire Resources NL is expected to under-perform the SG Fleet. In addition to that, Sandfire Resources is 2.65 times more volatile than SG Fleet Group. It trades about -0.17 of its total potential returns per unit of risk. SG Fleet Group is currently generating about 0.29 per unit of volatility. If you would invest  326.00  in SG Fleet Group on September 28, 2024 and sell it today you would earn a total of  15.00  from holding SG Fleet Group or generate 4.6% return on investment over 90 days.

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

Sandfire Resources NL  vs.  SG Fleet Group

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

SG Fleet Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SG Fleet Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, SG Fleet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sandfire Resources and SG Fleet

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

The idea behind Sandfire Resources NL and SG Fleet Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.