Correlation Between Gold Fields and ASA Gold
Can any of the company-specific risk be diversified away by investing in both Gold Fields and ASA Gold 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 ASA Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Fields Ltd and ASA Gold and, you can compare the effects of market volatilities on Gold Fields and ASA Gold 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 ASA Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and ASA Gold.
Diversification Opportunities for Gold Fields and ASA Gold
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gold and ASA is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and ASA Gold and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASA Gold 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 Ltd are associated (or correlated) with ASA Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASA Gold has no effect on the direction of Gold Fields i.e., Gold Fields and ASA Gold go up and down completely randomly.
Pair Corralation between Gold Fields and ASA Gold
Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the ASA Gold. In addition to that, Gold Fields is 1.57 times more volatile than ASA Gold and. It trades about -0.24 of its total potential returns per unit of risk. ASA Gold and is currently generating about -0.12 per unit of volatility. If you would invest 2,219 in ASA Gold and on September 20, 2024 and sell it today you would lose (191.00) from holding ASA Gold and or give up 8.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. ASA Gold and
Performance |
| Timeline |
| Gold Fields |
| ASA Gold |
Gold Fields and ASA Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and ASA Gold
The main advantage of trading using opposite Gold Fields and ASA Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, ASA Gold 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 ASA Gold will offset losses from the drop in ASA Gold's long position.The idea behind Gold Fields Ltd and ASA Gold and 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.| ASA Gold vs. AngloGold Ashanti plc | ASA Gold vs. Sprott Physical Gold | ASA Gold vs. Gold Fields Ltd | ASA Gold vs. Harmony Gold Mining |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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