Correlation Between Standard Bank and Gold Fields

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

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

Diversification Opportunities for Standard Bank and Gold Fields

-0.12

Correlation Coefficient

Standard Bank  Gold Fields

Good diversification

The 3 months correlation between Standard and Gold is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and Gold Fields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields and Standard Bank 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 Standard Bank 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 Standard Bank i.e., Standard Bank and Gold Fields go up and down completely randomly.

Pair Corralation between Standard Bank and Gold Fields

Assuming the 90 days trading horizon Standard Bank is expected to generate 42.62 times less return on investment than Gold Fields. But when comparing it to its historical volatility, Standard Bank Group is 2.06 times less risky than Gold Fields. It trades about 0.01 of its potential returns per unit of risk. Gold Fields is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,079,100  in Gold Fields on May 8, 2025 and sell it today you would earn a total of  1,266,300  from holding Gold Fields or generate 31.04% return on investment over 90 days.

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

Standard Bank Group  vs.  Gold Fields

Standard Bank Group

Risk-Adjusted Performance

Weakest

Over the last 90 days Standard Bank Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Standard Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Gold Fields

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Fields are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Gold Fields exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Standard Bank and Gold Fields

The main advantage of trading using opposite Standard Bank and Gold Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Bank 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 Standard Bank 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.