Correlation Between Gold Fields and Grupo Concesionario

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

By analyzing existing cross correlation between Gold Fields Ltd and Grupo Concesionario del, you can compare the effects of market volatilities on Gold Fields and Grupo Concesionario 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 Fields with a short position of Grupo Concesionario. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Grupo Concesionario.

Diversification Opportunities for Gold Fields and Grupo Concesionario

-0.75

Correlation Coefficient

Gold Fields  Grupo Concesionario

Pay attention - limited upside

The 3 months correlation between Gold and Grupo is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Grupo Concesionario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Concesionario del and Gold Fields 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 Fields Ltd are associated (or correlated) with Grupo Concesionario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Concesionario del has no effect on the direction of Gold Fields i.e., Gold Fields and Grupo Concesionario go up and down completely randomly.

Pair Corralation between Gold Fields and Grupo Concesionario

Assuming the 90 days trading horizon Gold Fields is expected to generate 2.22 times less return on investment than Grupo Concesionario. But when comparing it to its historical volatility, Gold Fields Ltd is 1.14 times less risky than Grupo Concesionario. It trades about 0.05 of its potential returns per unit of risk. Grupo Concesionario del is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  51,950  in Grupo Concesionario del on September 14, 2024 and sell it today you would earn a total of  59,050  from holding Grupo Concesionario del or generate 113.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Gold Fields Ltd  vs.  Grupo Concesionario del

Gold Fields

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold Fields Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Grupo Concesionario del

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Concesionario del are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Grupo Concesionario is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gold Fields and Grupo Concesionario

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

The idea behind Gold Fields Ltd and Grupo Concesionario del 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.