Correlation Between Gold Fields and Regis Resources

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

Diversification Opportunities for Gold Fields and Regis Resources

0.6

Correlation Coefficient

Gold Fields  Regis Resources

Poor diversification

The 3 months correlation between Gold and Regis is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Regis Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regis Resources 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 Regis Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regis Resources has no effect on the direction of Gold Fields i.e., Gold Fields and Regis Resources go up and down completely randomly.

Pair Corralation between Gold Fields and Regis Resources

Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the Regis Resources. But the stock apears to be less risky and, when comparing its historical volatility, Gold Fields Ltd is 1.29 times less risky than Regis Resources. The stock trades about -0.07 of its potential returns per unit of risk. The Regis Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  170.00  in Regis Resources on October 23, 2024 and sell it today you would earn a total of  14.00  from holding Regis Resources or generate 8.24% return on investment over 90 days.

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

Gold Fields Ltd  vs.  Regis Resources

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.

Regis Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Regis Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Regis Resources may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gold Fields and Regis Resources

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

The idea behind Gold Fields Ltd and Regis Resources 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.