Correlation Between Gold Fields and Amylyx Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Gold Fields and Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals, you can compare the effects of market volatilities on Gold Fields and Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Amylyx Pharmaceuticals.

Diversification Opportunities for Gold Fields and Amylyx Pharmaceuticals

-0.01

Correlation Coefficient

Gold Fields  Amylyx Pharmaceuticals

Good diversification

The 3 months correlation between Gold and Amylyx is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Amylyx Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amylyx Pharmaceuticals has no effect on the direction of Gold Fields i.e., Gold Fields and Amylyx Pharmaceuticals go up and down completely randomly.

Pair Corralation between Gold Fields and Amylyx Pharmaceuticals

Considering the 90-day investment horizon Gold Fields Ltd is expected to generate 0.64 times more return on investment than Amylyx Pharmaceuticals. However, Gold Fields Ltd is 1.57 times less risky than Amylyx Pharmaceuticals. It trades about -0.02 of its potential returns per unit of risk. Amylyx Pharmaceuticals is currently generating about -0.44 per unit of risk. If you would invest  1,423  in Gold Fields Ltd on October 5, 2024 and sell it today you would lose (17.00) from holding Gold Fields Ltd or give up 1.19% of portfolio value over 90 days.

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

Gold Fields Ltd  vs.  Amylyx Pharmaceuticals

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 unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Amylyx Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amylyx Pharmaceuticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Amylyx Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Fields and Amylyx Pharmaceuticals

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

The idea behind Gold Fields Ltd and Amylyx Pharmaceuticals 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.