Correlation Between Sassy Resources and Strategic Metals

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

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

Diversification Opportunities for Sassy Resources and Strategic Metals

0.27

Correlation Coefficient

Sassy Resources  Strategic Metals

Modest diversification

The 3 months correlation between Sassy and Strategic is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sassy Resources and Strategic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Metals and Sassy 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 Sassy Resources are associated (or correlated) with Strategic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Metals has no effect on the direction of Sassy Resources i.e., Sassy Resources and Strategic Metals go up and down completely randomly.

Pair Corralation between Sassy Resources and Strategic Metals

Assuming the 90 days horizon Sassy Resources is expected to generate 4.13 times more return on investment than Strategic Metals. However, Sassy Resources is 4.13 times more volatile than Strategic Metals. It trades about 0.04 of its potential returns per unit of risk. Strategic Metals is currently generating about 0.05 per unit of risk. If you would invest  12.00  in Sassy Resources on September 3, 2024 and sell it today you would lose (6.03) from holding Sassy Resources or give up 50.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Sassy Resources  vs.  Strategic Metals

Sassy Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sassy Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sassy Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Strategic Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Strategic Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sassy Resources and Strategic Metals

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

The idea behind Sassy Resources and Strategic 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.