Correlation Between South32 and GoGold Resources
Can any of the company-specific risk be diversified away by investing in both South32 and GoGold Resources 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 South32 and GoGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South32 Limited and GoGold Resources, you can compare the effects of market volatilities on South32 and GoGold Resources 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 South32 with a short position of GoGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of South32 and GoGold Resources.
Diversification Opportunities for South32 and GoGold Resources
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between South32 and GoGold is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding South32 Limited and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold Resources and South32 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 South32 Limited are associated (or correlated) with GoGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoGold Resources has no effect on the direction of South32 i.e., South32 and GoGold Resources go up and down completely randomly.
Pair Corralation between South32 and GoGold Resources
Assuming the 90 days horizon South32 Limited is expected to generate 1.03 times more return on investment than GoGold Resources. However, South32 is 1.03 times more volatile than GoGold Resources. It trades about 0.02 of its potential returns per unit of risk. GoGold Resources is currently generating about 0.0 per unit of risk. If you would invest 229.00 in South32 Limited on September 3, 2024 and sell it today you would lose (2.00) from holding South32 Limited or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.32% |
| Values | Daily Returns |
South32 Limited vs. GoGold Resources
Performance |
| Timeline |
| South32 Limited |
| GoGold Resources |
South32 and GoGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South32 and GoGold Resources
The main advantage of trading using opposite South32 and GoGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South32 position performs unexpectedly, GoGold Resources 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 GoGold Resources will offset losses from the drop in GoGold Resources' long position.| South32 vs. IGO Limited | South32 vs. Anglo American PLC | South32 vs. TNG Limited | South32 vs. Amarc Resources |
| GoGold Resources vs. Regenx Tech Corp | GoGold Resources vs. P2 Gold | GoGold Resources vs. Max Resource Corp | GoGold Resources vs. Pacific Ridge Exploration |
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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