Correlation Between Gold Road and Fresnillo Plc

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

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

Diversification Opportunities for Gold Road and Fresnillo Plc

0.0

Correlation Coefficient

Gold Road  Fresnillo Plc

Pay attention - limited upside

The 3 months correlation between Gold and Fresnillo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Fresnillo plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresnillo plc and Gold Road 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 Road Resources are associated (or correlated) with Fresnillo Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresnillo plc has no effect on the direction of Gold Road i.e., Gold Road and Fresnillo Plc go up and down completely randomly.

Pair Corralation between Gold Road and Fresnillo Plc

If you would invest  93.00  in Gold Road Resources on October 6, 2024 and sell it today you would earn a total of  29.00  from holding Gold Road Resources or generate 31.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Gold Road Resources  vs.  Fresnillo plc

Gold Road Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Road Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gold Road reported solid returns over the last few months and may actually be approaching a breakup point.

Fresnillo plc

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Fresnillo plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fresnillo Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gold Road and Fresnillo Plc

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

The idea behind Gold Road Resources and Fresnillo 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.