Correlation Between Commercial Metals and GoldMining

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

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

Diversification Opportunities for Commercial Metals and GoldMining

-0.01

Correlation Coefficient

Commercial Metals  GoldMining

Good diversification

The 3 months correlation between Commercial and GoldMining is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Metals and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Commercial Metals 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 Commercial Metals are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Commercial Metals i.e., Commercial Metals and GoldMining go up and down completely randomly.

Pair Corralation between Commercial Metals and GoldMining

Considering the 90-day investment horizon Commercial Metals is expected to generate 0.84 times more return on investment than GoldMining. However, Commercial Metals is 1.19 times less risky than GoldMining. It trades about 0.09 of its potential returns per unit of risk. GoldMining is currently generating about 0.02 per unit of risk. If you would invest  4,546  in Commercial Metals on May 3, 2025 and sell it today you would earn a total of  482.00  from holding Commercial Metals or generate 10.6% return on investment over 90 days.

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

Commercial Metals  vs.  GoldMining

Commercial Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, Commercial Metals may actually be approaching a critical reversion point that can send shares even higher in September 2025.

GoldMining

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GoldMining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, GoldMining is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Commercial Metals and GoldMining

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

The idea behind Commercial Metals and GoldMining 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.