Correlation Between Sandon Capital and Australian Strategic

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

By analyzing existing cross correlation between Sandon Capital Investments and Australian Strategic Materials, you can compare the effects of market volatilities on Sandon Capital and Australian Strategic 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 Sandon Capital with a short position of Australian Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandon Capital and Australian Strategic.

Diversification Opportunities for Sandon Capital and Australian Strategic

0.46

Correlation Coefficient

Sandon Capital  Australian Strategic

Very weak diversification

The 3 months correlation between Sandon and Australian is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sandon Capital Investments and Australian Strategic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Strategic and Sandon Capital 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 Sandon Capital Investments are associated (or correlated) with Australian Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Strategic has no effect on the direction of Sandon Capital i.e., Sandon Capital and Australian Strategic go up and down completely randomly.

Pair Corralation between Sandon Capital and Australian Strategic

Assuming the 90 days trading horizon Sandon Capital Investments is expected to generate 0.3 times more return on investment than Australian Strategic. However, Sandon Capital Investments is 3.35 times less risky than Australian Strategic. It trades about 0.08 of its potential returns per unit of risk. Australian Strategic Materials is currently generating about -0.04 per unit of risk. If you would invest  68.00  in Sandon Capital Investments on September 21, 2024 and sell it today you would earn a total of  9.00  from holding Sandon Capital Investments or generate 13.24% return on investment over 90 days.

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

Sandon Capital Investments  vs.  Australian Strategic Materials

Sandon Capital Inves

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sandon Capital Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Sandon Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Australian Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australian Strategic Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Australian Strategic 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 Sandon Capital and Australian Strategic

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

The idea behind Sandon Capital Investments and Australian Strategic Materials 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.