Correlation Between DRDGOLD Limited and St James
Can any of the company-specific risk be diversified away by investing in both DRDGOLD Limited and St James 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 Limited and St James into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DRDGOLD Limited ADR and St James Gold, you can compare the effects of market volatilities on DRDGOLD Limited and St James 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 Limited with a short position of St James. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRDGOLD Limited and St James.
Diversification Opportunities for DRDGOLD Limited and St James
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DRDGOLD and LRDJF is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding DRDGOLD Limited ADR and St James Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St James Gold and DRDGOLD Limited 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 ADR are associated (or correlated) with St James. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St James Gold has no effect on the direction of DRDGOLD Limited i.e., DRDGOLD Limited and St James go up and down completely randomly.
Pair Corralation between DRDGOLD Limited and St James
Considering the 90-day investment horizon DRDGOLD Limited ADR is expected to generate 0.37 times more return on investment than St James. However, DRDGOLD Limited ADR is 2.73 times less risky than St James. It trades about 0.03 of its potential returns per unit of risk. St James Gold is currently generating about 0.01 per unit of risk. If you would invest 881.00 in DRDGOLD Limited ADR on September 1, 2024 and sell it today you would earn a total of 93.00 from holding DRDGOLD Limited ADR or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DRDGOLD Limited ADR vs. St James Gold
Performance |
| Timeline |
| DRDGOLD Limited ADR |
| St James Gold |
DRDGOLD Limited and St James Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DRDGOLD Limited and St James
The main advantage of trading using opposite DRDGOLD Limited and St James positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRDGOLD Limited position performs unexpectedly, St James 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 St James will offset losses from the drop in St James' long position.| DRDGOLD Limited vs. Osisko Gold Ro | DRDGOLD Limited vs. Eldorado Gold Corp | DRDGOLD Limited vs. SSR Mining | DRDGOLD Limited vs. Idaho Strategic Resources |
| St James vs. Puma Exploration | St James vs. Sixty North Gold | St James vs. Red Pine Exploration | St James vs. Grande Portage Resources |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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