Correlation Between Gold Fields and POET Technologies

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

Diversification Opportunities for Gold Fields and POET Technologies

-0.57

Correlation Coefficient

Gold Fields  POET Technologies

Excellent diversification

The 3 months correlation between Gold and POET is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and POET Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POET Technologies 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 POET Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POET Technologies has no effect on the direction of Gold Fields i.e., Gold Fields and POET Technologies go up and down completely randomly.

Pair Corralation between Gold Fields and POET Technologies

Considering the 90-day investment horizon Gold Fields Ltd is expected to generate 0.2 times more return on investment than POET Technologies. However, Gold Fields Ltd is 5.07 times less risky than POET Technologies. It trades about 0.3 of its potential returns per unit of risk. POET Technologies is currently generating about 0.06 per unit of risk. If you would invest  1,358  in Gold Fields Ltd on October 20, 2024 and sell it today you would earn a total of  171.00  from holding Gold Fields Ltd or generate 12.59% return on investment over 90 days.

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

Gold Fields Ltd  vs.  POET Technologies

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

POET Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in POET Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, POET Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Fields and POET Technologies

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

The idea behind Gold Fields Ltd and POET Technologies 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.