Correlation Between GoldMining and Fonix Mobile

Can any of the company-specific risk be diversified away by investing in both GoldMining and Fonix Mobile 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 GoldMining and Fonix Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GoldMining and Fonix Mobile plc, you can compare the effects of market volatilities on GoldMining and Fonix Mobile 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 GoldMining with a short position of Fonix Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Fonix Mobile.

Diversification Opportunities for GoldMining and Fonix Mobile

0.47

Correlation Coefficient

GoldMining  Fonix Mobile

Very weak diversification

The 3 months correlation between GoldMining and Fonix is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Fonix Mobile plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fonix Mobile plc and GoldMining 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 GoldMining are associated (or correlated) with Fonix Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fonix Mobile plc has no effect on the direction of GoldMining i.e., GoldMining and Fonix Mobile go up and down completely randomly.

Pair Corralation between GoldMining and Fonix Mobile

Assuming the 90 days trading horizon GoldMining is expected to under-perform the Fonix Mobile. In addition to that, GoldMining is 1.68 times more volatile than Fonix Mobile plc. It trades about -0.03 of its total potential returns per unit of risk. Fonix Mobile plc is currently generating about 0.02 per unit of volatility. If you would invest  20,561  in Fonix Mobile plc on October 11, 2024 and sell it today you would earn a total of  1,239  from holding Fonix Mobile plc or generate 6.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	38.03%
Values	Daily Returns

GoldMining  vs.  Fonix Mobile plc

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fonix Mobile plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fonix Mobile plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Fonix Mobile is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GoldMining and Fonix Mobile

The main advantage of trading using opposite GoldMining and Fonix Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Fonix Mobile 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 Fonix Mobile will offset losses from the drop in Fonix Mobile's long position.

The idea behind GoldMining and Fonix Mobile plc 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.