Correlation Between Sarama Resources and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Sarama Resources and Berkshire Hathaway 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 Sarama Resources and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sarama Resources and Berkshire Hathaway, you can compare the effects of market volatilities on Sarama Resources and Berkshire Hathaway 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 Sarama Resources with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarama Resources and Berkshire Hathaway.
Diversification Opportunities for Sarama Resources and Berkshire Hathaway
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sarama and Berkshire is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sarama Resources and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Sarama 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 Sarama Resources are associated (or correlated) with Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Sarama Resources i.e., Sarama Resources and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Sarama Resources and Berkshire Hathaway
Assuming the 90 days horizon Sarama Resources is expected to generate 17.93 times more return on investment than Berkshire Hathaway. However, Sarama Resources is 17.93 times more volatile than Berkshire Hathaway. It trades about 0.06 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.14 per unit of risk. If you would invest 0.73 in Sarama Resources on January 25, 2024 and sell it today you would earn a total of 0.01 from holding Sarama Resources or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sarama Resources vs. Berkshire Hathaway
Performance |
| Timeline |
| Sarama Resources |
| Berkshire Hathaway |
Sarama Resources and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sarama Resources and Berkshire Hathaway
The main advantage of trading using opposite Sarama Resources and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarama Resources position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| Sarama Resources vs. Aurelia Metals Limited | Sarama Resources vs. Adriatic Metals PLC | Sarama Resources vs. Progressive Planet Solutions | Sarama Resources vs. Almonty Industries |
| Berkshire Hathaway vs. Stevia Nutra Corp | Berkshire Hathaway vs. Regent Ventures | Berkshire Hathaway vs. Element Global | Berkshire Hathaway vs. Affiliated Resources Corp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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