Correlation Between Skycity Entertainment and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both Skycity Entertainment and Sandfire Resources 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 Skycity Entertainment and Sandfire Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skycity Entertainment Group and Sandfire Resources NL, you can compare the effects of market volatilities on Skycity Entertainment and Sandfire Resources 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 Skycity Entertainment with a short position of Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skycity Entertainment and Sandfire Resources.
Diversification Opportunities for Skycity Entertainment and Sandfire Resources
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Skycity and Sandfire is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Skycity Entertainment Group and Sandfire Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources and Skycity Entertainment 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 Skycity Entertainment Group are associated (or correlated) with Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of Skycity Entertainment i.e., Skycity Entertainment and Sandfire Resources go up and down completely randomly.
Pair Corralation between Skycity Entertainment and Sandfire Resources
Assuming the 90 days trading horizon Skycity Entertainment Group is expected to under-perform the Sandfire Resources. In addition to that, Skycity Entertainment is 1.06 times more volatile than Sandfire Resources NL. It trades about -0.07 of its total potential returns per unit of risk. Sandfire Resources NL is currently generating about 0.12 per unit of volatility. If you would invest 939.00 in Sandfire Resources NL on December 30, 2024 and sell it today you would earn a total of 141.00 from holding Sandfire Resources NL or generate 15.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Skycity Entertainment Group vs. Sandfire Resources NL
Performance |
Timeline |
Skycity Entertainment |
Sandfire Resources |
Skycity Entertainment and Sandfire Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Skycity Entertainment and Sandfire Resources
The main advantage of trading using opposite Skycity Entertainment and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skycity Entertainment position performs unexpectedly, Sandfire Resources 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.Skycity Entertainment vs. ABACUS STORAGE KING | Skycity Entertainment vs. EVE Health Group | Skycity Entertainment vs. Rights Applications | Skycity Entertainment vs. Super Retail Group |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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