Correlation Between DCC Plc and GoldMining
Can any of the company-specific risk be diversified away by investing in both DCC Plc 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 DCC Plc and GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DCC plc and GoldMining, you can compare the effects of market volatilities on DCC Plc 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 DCC Plc with a short position of GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of DCC Plc and GoldMining.
Diversification Opportunities for DCC Plc and GoldMining
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DCC and GoldMining is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding DCC plc and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and DCC Plc 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 DCC plc 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 DCC Plc i.e., DCC Plc and GoldMining go up and down completely randomly.
Pair Corralation between DCC Plc and GoldMining
Assuming the 90 days trading horizon DCC plc is expected to generate 1.06 times more return on investment than GoldMining. However, DCC Plc is 1.06 times more volatile than GoldMining. It trades about 0.24 of its potential returns per unit of risk. GoldMining is currently generating about -0.05 per unit of risk. If you would invest 484,624 in DCC plc on September 1, 2024 and sell it today you would earn a total of 87,876 from holding DCC plc or generate 18.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 56.52% |
| Values | Daily Returns |
DCC plc vs. GoldMining
Performance |
| Timeline |
| DCC plc |
| GoldMining |
DCC Plc and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DCC Plc and GoldMining
The main advantage of trading using opposite DCC Plc and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DCC Plc 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.| DCC Plc vs. Cairn Homes PLC | DCC Plc vs. Silvercorp Metals | DCC Plc vs. Playtech Plc | DCC Plc vs. Greenroc Mining PLC |
| GoldMining vs. Greenroc Mining PLC | GoldMining vs. Silvercorp Metals | GoldMining vs. Sydbank | GoldMining vs. AMG Advanced Metallurgical |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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