Correlation Between Rex Trueform and Gold Fields

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

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

Diversification Opportunities for Rex Trueform and Gold Fields

-0.56

Correlation Coefficient

Rex Trueform  Gold Fields

Excellent diversification

The 3 months correlation between Rex and Gold is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Rex Trueform Group and Gold Fields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields and Rex Trueform 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 Rex Trueform Group 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 Rex Trueform i.e., Rex Trueform and Gold Fields go up and down completely randomly.

Pair Corralation between Rex Trueform and Gold Fields

Assuming the 90 days trading horizon Rex Trueform Group is expected to under-perform the Gold Fields. But the stock apears to be less risky and, when comparing its historical volatility, Rex Trueform Group is 2.57 times less risky than Gold Fields. The stock trades about -0.1 of its potential returns per unit of risk. The Gold Fields is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,406,791  in Gold Fields on September 4, 2024 and sell it today you would earn a total of  169,309  from holding Gold Fields or generate 7.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Rex Trueform Group  vs.  Gold Fields

Rex Trueform Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gold Fields

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Fields are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Gold Fields may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rex Trueform and Gold Fields

The main advantage of trading using opposite Rex Trueform and Gold Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rex Trueform 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 Rex Trueform Group and Gold Fields 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.