Correlation Between South32 and Gold79 Mines

Can any of the company-specific risk be diversified away by investing in both South32 and Gold79 Mines 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 South32 and Gold79 Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between South32 Limited and Gold79 Mines, you can compare the effects of market volatilities on South32 and Gold79 Mines 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 South32 with a short position of Gold79 Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of South32 and Gold79 Mines.

Diversification Opportunities for South32 and Gold79 Mines

0.4

Correlation Coefficient

South32  Gold79 Mines

Very weak diversification

The 3 months correlation between South32 and Gold79 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding South32 Limited and Gold79 Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold79 Mines and South32 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 South32 Limited are associated (or correlated) with Gold79 Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold79 Mines has no effect on the direction of South32 i.e., South32 and Gold79 Mines go up and down completely randomly.

Pair Corralation between South32 and Gold79 Mines

Assuming the 90 days horizon South32 Limited is expected to under-perform the Gold79 Mines. But the pink sheet apears to be less risky and, when comparing its historical volatility, South32 Limited is 2.08 times less risky than Gold79 Mines. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Gold79 Mines is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Gold79 Mines on December 29, 2024 and sell it today you would earn a total of  16.00  from holding Gold79 Mines or generate 80.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

South32 Limited  vs.  Gold79 Mines

South32 Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days South32 Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, South32 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Gold79 Mines

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gold79 Mines are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gold79 Mines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with South32 and Gold79 Mines

The main advantage of trading using opposite South32 and Gold79 Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South32 position performs unexpectedly, Gold79 Mines 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 Gold79 Mines will offset losses from the drop in Gold79 Mines' long position.

The idea behind South32 Limited and Gold79 Mines 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.