Correlation Between CA Sales and DRDGOLD
Can any of the company-specific risk be diversified away by investing in both CA Sales and DRDGOLD 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 CA Sales and DRDGOLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CA Sales Holdings and DRDGOLD Limited, you can compare the effects of market volatilities on CA Sales and DRDGOLD 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 CA Sales with a short position of DRDGOLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of CA Sales and DRDGOLD.
Diversification Opportunities for CA Sales and DRDGOLD
Weak diversification
The 3 months correlation between CAA and DRDGOLD is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding CA Sales Holdings and DRDGOLD Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRDGOLD Limited and CA Sales 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 CA Sales Holdings are associated (or correlated) with DRDGOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRDGOLD Limited has no effect on the direction of CA Sales i.e., CA Sales and DRDGOLD go up and down completely randomly.
Pair Corralation between CA Sales and DRDGOLD
Assuming the 90 days trading horizon CA Sales Holdings is expected to generate 0.85 times more return on investment than DRDGOLD. However, CA Sales Holdings is 1.18 times less risky than DRDGOLD. It trades about 0.1 of its potential returns per unit of risk. DRDGOLD Limited is currently generating about 0.04 per unit of risk. If you would invest 60,633 in CA Sales Holdings on September 4, 2024 and sell it today you would earn a total of 106,567 from holding CA Sales Holdings or generate 175.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CA Sales Holdings vs. DRDGOLD Limited
Performance |
| Timeline |
| CA Sales Holdings |
| DRDGOLD Limited |
CA Sales and DRDGOLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CA Sales and DRDGOLD
The main advantage of trading using opposite CA Sales and DRDGOLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CA Sales position performs unexpectedly, DRDGOLD 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 DRDGOLD will offset losses from the drop in DRDGOLD's long position.| CA Sales vs. eMedia Holdings Limited | CA Sales vs. British American Tobacco | CA Sales vs. Kumba Iron Ore | CA Sales vs. Blue Label Telecoms |
| DRDGOLD vs. Life Healthcare | DRDGOLD vs. AfroCentric Investment Corp | DRDGOLD vs. Zeder Investments | DRDGOLD vs. Hosken Consolidated Investments |
Check out your portfolio center.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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