Correlation Between DRDGOLD and African Media
Can any of the company-specific risk be diversified away by investing in both DRDGOLD and African Media 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 DRDGOLD and African Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DRDGOLD Limited and African Media Entertainment, you can compare the effects of market volatilities on DRDGOLD and African Media 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 DRDGOLD with a short position of African Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRDGOLD and African Media.
Diversification Opportunities for DRDGOLD and African Media
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DRDGOLD and African is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding DRDGOLD Limited and African Media Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Media Entert and DRDGOLD 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 DRDGOLD Limited are associated (or correlated) with African Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Media Entert has no effect on the direction of DRDGOLD i.e., DRDGOLD and African Media go up and down completely randomly.
Pair Corralation between DRDGOLD and African Media
Assuming the 90 days trading horizon DRDGOLD is expected to generate 16.64 times less return on investment than African Media. But when comparing it to its historical volatility, DRDGOLD Limited is 16.98 times less risky than African Media. It trades about 0.04 of its potential returns per unit of risk. African Media Entertainment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 313,314 in African Media Entertainment on September 12, 2024 and sell it today you would earn a total of 96,686 from holding African Media Entertainment or generate 30.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DRDGOLD Limited vs. African Media Entertainment
Performance |
| Timeline |
| DRDGOLD Limited |
| African Media Entert |
DRDGOLD and African Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DRDGOLD and African Media
The main advantage of trading using opposite DRDGOLD and African Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRDGOLD position performs unexpectedly, African Media 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 African Media will offset losses from the drop in African Media's long position.| DRDGOLD vs. African Media Entertainment | DRDGOLD vs. Deneb Investments | DRDGOLD vs. Kumba Iron Ore | DRDGOLD vs. MC Mining |
| African Media vs. Sasol Ltd Bee | African Media vs. Centaur Bci Balanced | African Media vs. Sabvest Capital | African Media vs. Growthpoint Properties |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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