Correlation Between Gold79 Mines and Impala Platinum

Can any of the company-specific risk be diversified away by investing in both Gold79 Mines and Impala Platinum 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 Gold79 Mines and Impala Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gold79 Mines and Impala Platinum Holdings, you can compare the effects of market volatilities on Gold79 Mines and Impala Platinum 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 Gold79 Mines with a short position of Impala Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold79 Mines and Impala Platinum.

Diversification Opportunities for Gold79 Mines and Impala Platinum

0.51

Correlation Coefficient

Gold79 Mines  Impala Platinum

Very weak diversification

The 3 months correlation between Gold79 and Impala is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Gold79 Mines and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings and Gold79 Mines 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 Gold79 Mines are associated (or correlated) with Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of Gold79 Mines i.e., Gold79 Mines and Impala Platinum go up and down completely randomly.

Pair Corralation between Gold79 Mines and Impala Platinum

Assuming the 90 days horizon Gold79 Mines is expected to generate 2.18 times more return on investment than Impala Platinum. However, Gold79 Mines is 2.18 times more volatile than Impala Platinum Holdings. It trades about 0.06 of its potential returns per unit of risk. Impala Platinum Holdings is currently generating about -0.16 per unit of risk. If you would invest  21.00  in Gold79 Mines on October 4, 2024 and sell it today you would earn a total of  3.00  from holding Gold79 Mines or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Gold79 Mines  vs.  Impala Platinum Holdings

Gold79 Mines

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gold79 Mines are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gold79 Mines reported solid returns over the last few months and may actually be approaching a breakup point.

Impala Platinum Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impala Platinum Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gold79 Mines and Impala Platinum

The main advantage of trading using opposite Gold79 Mines and Impala Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold79 Mines position performs unexpectedly, Impala Platinum 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 Impala Platinum will offset losses from the drop in Impala Platinum's long position.

The idea behind Gold79 Mines and Impala Platinum Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.