Correlation Between New World and Amani Gold

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

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

Diversification Opportunities for New World and Amani Gold

1.0

Correlation Coefficient

New World  Amani Gold

No risk reduction

The 3 months correlation between New and Amani is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding New World Gold and Amani Gold Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amani Gold Limited and New World 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 New World Gold are associated (or correlated) with Amani Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amani Gold Limited has no effect on the direction of New World i.e., New World and Amani Gold go up and down completely randomly.

Pair Corralation between New World and Amani Gold

If you would invest  0.01  in Amani Gold Limited on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Amani Gold Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	4.76%
Values	Daily Returns

New World Gold  vs.  Amani Gold Limited

New World Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New World Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, New World is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Amani Gold Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with New World and Amani Gold

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

The idea behind New World Gold and Amani Gold Limited 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.