Correlation Between Sandon Capital and Falcon Metals

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

Diversification Opportunities for Sandon Capital and Falcon Metals

0.33

Correlation Coefficient

Sandon Capital  Falcon Metals

Weak diversification

The 3 months correlation between Sandon and Falcon is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sandon Capital Investments and Falcon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Metals 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 Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals has no effect on the direction of Sandon Capital i.e., Sandon Capital and Falcon Metals go up and down completely randomly.

Pair Corralation between Sandon Capital and Falcon Metals

Assuming the 90 days trading horizon Sandon Capital Investments is expected to generate 0.41 times more return on investment than Falcon Metals. However, Sandon Capital Investments is 2.47 times less risky than Falcon Metals. It trades about 0.13 of its potential returns per unit of risk. Falcon Metals is currently generating about -0.31 per unit of risk. If you would invest  77.00  in Sandon Capital Investments on October 8, 2024 and sell it today you would earn a total of  3.00  from holding Sandon Capital Investments or generate 3.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.89%
Values	Daily Returns

Sandon Capital Investments  vs.  Falcon Metals

Sandon Capital Inves

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sandon Capital Investments are ranked lower than 2 (%) 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.

Falcon Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Metals 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 essential 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.

Pair Trading with Sandon Capital and Falcon Metals

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

The idea behind Sandon Capital Investments and Falcon Metals 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.