Correlation Between Golden Goliath and Sandfire Resources

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

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

Diversification Opportunities for Golden Goliath and Sandfire Resources

-0.31

Correlation Coefficient

Golden Goliath  Sandfire Resources

Very good diversification

The 3 months correlation between Golden and Sandfire is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Golden Goliath Resources and Sandfire Resources America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources and Golden Goliath 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 Golden Goliath Resources 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 Golden Goliath i.e., Golden Goliath and Sandfire Resources go up and down completely randomly.

Pair Corralation between Golden Goliath and Sandfire Resources

Assuming the 90 days horizon Golden Goliath Resources is expected to generate 27.68 times more return on investment than Sandfire Resources. However, Golden Goliath is 27.68 times more volatile than Sandfire Resources America. It trades about 0.13 of its potential returns per unit of risk. Sandfire Resources America is currently generating about 0.01 per unit of risk. If you would invest  6.00  in Golden Goliath Resources on May 5, 2025 and sell it today you would earn a total of  0.00  from holding Golden Goliath Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Golden Goliath Resources  vs.  Sandfire Resources America

Golden Goliath Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Goliath Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Golden Goliath reported solid returns over the last few months and may actually be approaching a breakup point.

Sandfire Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sandfire Resources America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Sandfire Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Golden Goliath and Sandfire Resources

The main advantage of trading using opposite Golden Goliath and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Goliath 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.

The idea behind Golden Goliath Resources and Sandfire Resources America 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.