Correlation Between Gold Fields and Sun Hung
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Sun Hung 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 Sun Hung 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 Sun Hung Kai, you can compare the effects of market volatilities on Gold Fields and Sun Hung 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 Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Sun Hung.
Diversification Opportunities for Gold Fields and Sun Hung
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and Sun is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Sun Hung Kai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Hung Kai 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 Sun Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Hung Kai has no effect on the direction of Gold Fields i.e., Gold Fields and Sun Hung go up and down completely randomly.
Pair Corralation between Gold Fields and Sun Hung
Considering the 90-day investment horizon Gold Fields Ltd is expected to generate 0.8 times more return on investment than Sun Hung. However, Gold Fields Ltd is 1.25 times less risky than Sun Hung. It trades about 0.01 of its potential returns per unit of risk. Sun Hung Kai is currently generating about -0.01 per unit of risk. If you would invest 1,503 in Gold Fields Ltd on August 31, 2024 and sell it today you would lose (54.00) from holding Gold Fields Ltd or give up 3.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 64.97% |
| Values | Daily Returns |
Gold Fields Ltd vs. Sun Hung Kai
Performance |
| Timeline |
| Gold Fields |
| Sun Hung Kai |
Gold Fields and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Sun Hung
The main advantage of trading using opposite Gold Fields and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Sun Hung 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 Sun Hung will offset losses from the drop in Sun Hung'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 |
| Sun Hung vs. HUMANA INC | Sun Hung vs. SCOR PK | Sun Hung vs. Aquagold International | Sun Hung vs. Thrivent High Yield |
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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