Correlation Between Gold Fields and Centerra Gold

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

Diversification Opportunities for Gold Fields and Centerra Gold

0.56

Correlation Coefficient

Gold Fields  Centerra Gold

Very weak diversification

The 3 months correlation between Gold and Centerra is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Centerra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerra Gold 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 Centerra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerra Gold has no effect on the direction of Gold Fields i.e., Gold Fields and Centerra Gold go up and down completely randomly.

Pair Corralation between Gold Fields and Centerra Gold

Considering the 90-day investment horizon Gold Fields Ltd is expected to generate 1.09 times more return on investment than Centerra Gold. However, Gold Fields is 1.09 times more volatile than Centerra Gold. It trades about 0.05 of its potential returns per unit of risk. Centerra Gold is currently generating about -0.05 per unit of risk. If you would invest  1,358  in Gold Fields Ltd on August 31, 2024 and sell it today you would earn a total of  98.00  from holding Gold Fields Ltd or generate 7.22% return on investment over 90 days.

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

Gold Fields Ltd  vs.  Centerra Gold

Gold Fields

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Fields Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Gold Fields may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Centerra Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centerra Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Gold Fields and Centerra Gold

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

The idea behind Gold Fields Ltd and Centerra Gold 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.