Correlation Between Gold Fields and E Media
Can any of the company-specific risk be diversified away by investing in both Gold Fields and E Media 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 Gold Fields and E Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Fields and E Media Holdings, you can compare the effects of market volatilities on Gold Fields and E Media 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 Gold Fields with a short position of E Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and E Media.
Diversification Opportunities for Gold Fields and E Media
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gold and EMH is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields and E Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Media Holdings and Gold Fields 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 Gold Fields are associated (or correlated) with E Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Media Holdings has no effect on the direction of Gold Fields i.e., Gold Fields and E Media go up and down completely randomly.
Pair Corralation between Gold Fields and E Media
Assuming the 90 days trading horizon Gold Fields is expected to generate 0.58 times more return on investment than E Media. However, Gold Fields is 1.74 times less risky than E Media. It trades about 0.48 of its potential returns per unit of risk. E Media Holdings is currently generating about 0.02 per unit of risk. If you would invest 2,619,700 in Gold Fields on November 3, 2024 and sell it today you would earn a total of 613,600 from holding Gold Fields or generate 23.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Gold Fields vs. E Media Holdings
Performance |
| Timeline |
| Gold Fields |
| E Media Holdings |
Gold Fields and E Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and E Media
The main advantage of trading using opposite Gold Fields and E Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, E Media 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 E Media will offset losses from the drop in E Media's long position.| Gold Fields vs. eMedia Holdings Limited | Gold Fields vs. Kumba Iron Ore | Gold Fields vs. British American Tobacco | Gold Fields vs. Master Drilling Group |
| E Media vs. Blue Label Telecoms | E Media vs. Frontier Transport Holdings | E Media vs. HomeChoice Investments | E Media vs. African Media Entertainment |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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