Correlation Between DRDGOLD Limited and Gold Terra
Can any of the company-specific risk be diversified away by investing in both DRDGOLD Limited and Gold Terra 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 Gold Terra 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 Gold Terra Resource, you can compare the effects of market volatilities on DRDGOLD Limited and Gold Terra 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 Gold Terra. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRDGOLD Limited and Gold Terra.
Diversification Opportunities for DRDGOLD Limited and Gold Terra
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DRDGOLD and Gold is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding DRDGOLD Limited ADR and Gold Terra Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Terra Resource 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 Gold Terra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Terra Resource has no effect on the direction of DRDGOLD Limited i.e., DRDGOLD Limited and Gold Terra go up and down completely randomly.
Pair Corralation between DRDGOLD Limited and Gold Terra
Considering the 90-day investment horizon DRDGOLD Limited ADR is expected to under-perform the Gold Terra. In addition to that, DRDGOLD Limited is 1.13 times more volatile than Gold Terra Resource. It trades about -0.24 of its total potential returns per unit of risk. Gold Terra Resource is currently generating about 0.06 per unit of volatility. If you would invest 4.07 in Gold Terra Resource on August 29, 2024 and sell it today you would earn a total of 0.13 from holding Gold Terra Resource or generate 3.19% 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. Gold Terra Resource
Performance |
| Timeline |
| DRDGOLD Limited ADR |
| Gold Terra Resource |
DRDGOLD Limited and Gold Terra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DRDGOLD Limited and Gold Terra
The main advantage of trading using opposite DRDGOLD Limited and Gold Terra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRDGOLD Limited position performs unexpectedly, Gold Terra 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 Gold Terra will offset losses from the drop in Gold Terra's 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 |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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