Correlation Between Gulf Resources and Newmont Goldcorp

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

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

Diversification Opportunities for Gulf Resources and Newmont Goldcorp

0.68

Correlation Coefficient

Gulf Resources  Newmont Goldcorp

Poor diversification

The 3 months correlation between Gulf and Newmont is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Resources and Newmont Goldcorp Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Goldcorp Corp and Gulf Resources 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 Gulf Resources are associated (or correlated) with Newmont Goldcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Goldcorp Corp has no effect on the direction of Gulf Resources i.e., Gulf Resources and Newmont Goldcorp go up and down completely randomly.

Pair Corralation between Gulf Resources and Newmont Goldcorp

Given the investment horizon of 90 days Gulf Resources is expected to under-perform the Newmont Goldcorp. In addition to that, Gulf Resources is 2.18 times more volatile than Newmont Goldcorp Corp. It trades about -0.14 of its total potential returns per unit of risk. Newmont Goldcorp Corp is currently generating about -0.12 per unit of volatility. If you would invest  5,171  in Newmont Goldcorp Corp on September 2, 2024 and sell it today you would lose (977.00) from holding Newmont Goldcorp Corp or give up 18.89% of portfolio value over 90 days.

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

Gulf Resources  vs.  Newmont Goldcorp Corp

Gulf Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gulf Resources 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 rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Newmont Goldcorp Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont Goldcorp Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Gulf Resources and Newmont Goldcorp

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

The idea behind Gulf Resources and Newmont Goldcorp Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.