Correlation Between GoldMining and Worthington Steel

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

By analyzing existing cross correlation between GoldMining and Worthington Steel, you can compare the effects of market volatilities on GoldMining and Worthington Steel 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 GoldMining with a short position of Worthington Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Worthington Steel.

Diversification Opportunities for GoldMining and Worthington Steel

-0.44

Correlation Coefficient

GoldMining  Worthington Steel

Very good diversification

The 3 months correlation between GoldMining and Worthington is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel and GoldMining 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 GoldMining are associated (or correlated) with Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of GoldMining i.e., GoldMining and Worthington Steel go up and down completely randomly.

Pair Corralation between GoldMining and Worthington Steel

Given the investment horizon of 90 days GoldMining is expected to generate 0.85 times more return on investment than Worthington Steel. However, GoldMining is 1.17 times less risky than Worthington Steel. It trades about 0.03 of its potential returns per unit of risk. Worthington Steel is currently generating about -0.11 per unit of risk. If you would invest  80.00  in GoldMining on December 28, 2024 and sell it today you would earn a total of  2.03  from holding GoldMining or generate 2.54% return on investment over 90 days.

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

GoldMining  vs.  Worthington Steel

GoldMining

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GoldMining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, GoldMining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Worthington Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Worthington Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GoldMining and Worthington Steel

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

The idea behind GoldMining and Worthington Steel 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.