Correlation Between Gold Fields and CSP
Can any of the company-specific risk be diversified away by investing in both Gold Fields and CSP 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 CSP 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 CSP Inc, you can compare the effects of market volatilities on Gold Fields and CSP 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 CSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and CSP.
Diversification Opportunities for Gold Fields and CSP
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gold and CSP is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc 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 CSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Inc has no effect on the direction of Gold Fields i.e., Gold Fields and CSP go up and down completely randomly.
Pair Corralation between Gold Fields and CSP
Considering the 90-day investment horizon Gold Fields is expected to generate 3.65 times less return on investment than CSP. But when comparing it to its historical volatility, Gold Fields Ltd is 1.71 times less risky than CSP. It trades about 0.04 of its potential returns per unit of risk. CSP Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 449.00 in CSP Inc on August 28, 2024 and sell it today you would earn a total of 1,400 from holding CSP Inc or generate 311.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. CSP Inc
Performance |
| Timeline |
| Gold Fields |
| CSP Inc |
Gold Fields and CSP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and CSP
The main advantage of trading using opposite Gold Fields and CSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, CSP 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 CSP will offset losses from the drop in CSP's long position.| Gold Fields vs. Agnico Eagle Mines | Gold Fields vs. Kinross Gold | Gold Fields vs. Harmony Gold Mining | Gold Fields vs. Franco Nevada |
| CSP vs. The Hackett Group | CSP vs. Nayax | CSP vs. Formula Systems 1985 | CSP vs. Information Services Group |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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