Correlation Between Gold Fields and Pan African
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Pan African 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 Pan African into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Fields and Pan African Resources, you can compare the effects of market volatilities on Gold Fields and Pan African 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 Pan African. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Pan African.
Diversification Opportunities for Gold Fields and Pan African
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gold and Pan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields and Pan African Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan African Resources 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 Pan African. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan African Resources has no effect on the direction of Gold Fields i.e., Gold Fields and Pan African go up and down completely randomly.
Pair Corralation between Gold Fields and Pan African
Assuming the 90 days trading horizon Gold Fields is expected to under-perform the Pan African. In addition to that, Gold Fields is 1.07 times more volatile than Pan African Resources. It trades about -0.19 of its total potential returns per unit of risk. Pan African Resources is currently generating about 0.02 per unit of volatility. If you would invest 82,300 in Pan African Resources on August 28, 2024 and sell it today you would earn a total of 300.00 from holding Pan African Resources or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields vs. Pan African Resources
Performance |
| Timeline |
| Gold Fields |
| Pan African Resources |
Gold Fields and Pan African Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Pan African
The main advantage of trading using opposite Gold Fields and Pan African positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Pan African 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 Pan African will offset losses from the drop in Pan African's long position.| Gold Fields vs. HomeChoice Investments | Gold Fields vs. Copper 360 | Gold Fields vs. Blue Label Telecoms | Gold Fields vs. E Media Holdings |
| Pan African vs. Ascendis Health | Pan African vs. Astoria Investments | Pan African vs. Advtech | Pan African vs. Bytes Technology |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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