Correlation Between Azucar Minerals and Gemfields Group

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

By analyzing existing cross correlation between Azucar Minerals and Gemfields Group Limited, you can compare the effects of market volatilities on Azucar Minerals and Gemfields Group 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 Azucar Minerals with a short position of Gemfields Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azucar Minerals and Gemfields Group.

Diversification Opportunities for Azucar Minerals and Gemfields Group

0.26

Correlation Coefficient

Azucar Minerals  Gemfields Group

Modest diversification

The 3 months correlation between Azucar and Gemfields is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Azucar Minerals and Gemfields Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemfields Group and Azucar Minerals 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 Azucar Minerals are associated (or correlated) with Gemfields Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemfields Group has no effect on the direction of Azucar Minerals i.e., Azucar Minerals and Gemfields Group go up and down completely randomly.

Pair Corralation between Azucar Minerals and Gemfields Group

Assuming the 90 days horizon Azucar Minerals is expected to generate 2.79 times more return on investment than Gemfields Group. However, Azucar Minerals is 2.79 times more volatile than Gemfields Group Limited. It trades about 0.04 of its potential returns per unit of risk. Gemfields Group Limited is currently generating about -0.13 per unit of risk. If you would invest  2.10  in Azucar Minerals on December 30, 2024 and sell it today you would lose (0.40) from holding Azucar Minerals or give up 19.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.94%
Values	Daily Returns

Azucar Minerals  vs.  Gemfields Group Limited

Azucar Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Azucar Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Azucar Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Gemfields Group

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Azucar Minerals and Gemfields Group

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

The idea behind Azucar Minerals and Gemfields Group Limited 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.