Correlation Between DRDGOLD and Trematon Capital
Can any of the company-specific risk be diversified away by investing in both DRDGOLD and Trematon Capital 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 Trematon Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DRDGOLD Limited and Trematon Capital Investments, you can compare the effects of market volatilities on DRDGOLD and Trematon Capital 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 Trematon Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRDGOLD and Trematon Capital.
Diversification Opportunities for DRDGOLD and Trematon Capital
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between DRDGOLD and Trematon is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding DRDGOLD Limited and Trematon Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trematon Capital Inv 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 Trematon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trematon Capital Inv has no effect on the direction of DRDGOLD i.e., DRDGOLD and Trematon Capital go up and down completely randomly.
Pair Corralation between DRDGOLD and Trematon Capital
Assuming the 90 days trading horizon DRDGOLD Limited is expected to generate 0.61 times more return on investment than Trematon Capital. However, DRDGOLD Limited is 1.63 times less risky than Trematon Capital. It trades about 0.13 of its potential returns per unit of risk. Trematon Capital Investments is currently generating about 0.0 per unit of risk. If you would invest 144,500 in DRDGOLD Limited on September 3, 2024 and sell it today you would earn a total of 32,500 from holding DRDGOLD Limited or generate 22.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
DRDGOLD Limited vs. Trematon Capital Investments
Performance |
| Timeline |
| DRDGOLD Limited |
| Trematon Capital Inv |
DRDGOLD and Trematon Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DRDGOLD and Trematon Capital
The main advantage of trading using opposite DRDGOLD and Trematon Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRDGOLD position performs unexpectedly, Trematon Capital 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 Trematon Capital will offset losses from the drop in Trematon Capital's long position.| DRDGOLD vs. Trematon Capital Investments | DRDGOLD vs. CA Sales Holdings | DRDGOLD vs. Astoria Investments | DRDGOLD vs. Afine Investments |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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