Correlation Between Osisko Gold and Gold Fields

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

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

Diversification Opportunities for Osisko Gold and Gold Fields

0.4

Correlation Coefficient

Osisko Gold  Gold Fields

Very weak diversification

The 3 months correlation between Osisko and Gold is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Osisko Gold Ro and Gold Fields Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields and Osisko Gold 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 Osisko Gold Ro are associated (or correlated) with Gold Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Fields has no effect on the direction of Osisko Gold i.e., Osisko Gold and Gold Fields go up and down completely randomly.

Pair Corralation between Osisko Gold and Gold Fields

Allowing for the 90-day total investment horizon Osisko Gold Ro is expected to under-perform the Gold Fields. But the stock apears to be less risky and, when comparing its historical volatility, Osisko Gold Ro is 1.34 times less risky than Gold Fields. The stock trades about -0.05 of its potential returns per unit of risk. The Gold Fields Ltd is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,449  in Gold Fields Ltd on November 28, 2024 and sell it today you would earn a total of  480.00  from holding Gold Fields Ltd or generate 33.13% return on investment over 90 days.

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

Osisko Gold Ro  vs.  Gold Fields Ltd

Osisko Gold Ro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Osisko Gold Ro has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Osisko Gold is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Gold Fields

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Fields Ltd are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Gold Fields demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Osisko Gold and Gold Fields

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

The idea behind Osisko Gold Ro and Gold Fields Ltd 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.