Correlation Between HomeChoice Investments and DRDGOLD
Can any of the company-specific risk be diversified away by investing in both HomeChoice Investments and DRDGOLD 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 HomeChoice Investments and DRDGOLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeChoice Investments and DRDGOLD Limited, you can compare the effects of market volatilities on HomeChoice Investments and DRDGOLD 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 HomeChoice Investments with a short position of DRDGOLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeChoice Investments and DRDGOLD.
Diversification Opportunities for HomeChoice Investments and DRDGOLD
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HomeChoice and DRDGOLD is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding HomeChoice Investments and DRDGOLD Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRDGOLD Limited and HomeChoice Investments 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 HomeChoice Investments are associated (or correlated) with DRDGOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRDGOLD Limited has no effect on the direction of HomeChoice Investments i.e., HomeChoice Investments and DRDGOLD go up and down completely randomly.
Pair Corralation between HomeChoice Investments and DRDGOLD
Assuming the 90 days trading horizon HomeChoice Investments is expected to generate 0.96 times more return on investment than DRDGOLD. However, HomeChoice Investments is 1.04 times less risky than DRDGOLD. It trades about 0.08 of its potential returns per unit of risk. DRDGOLD Limited is currently generating about 0.05 per unit of risk. If you would invest 200,000 in HomeChoice Investments on September 3, 2024 and sell it today you would earn a total of 100,000 from holding HomeChoice Investments or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.56% |
| Values | Daily Returns |
HomeChoice Investments vs. DRDGOLD Limited
Performance |
| Timeline |
| HomeChoice Investments |
| DRDGOLD Limited |
HomeChoice Investments and DRDGOLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeChoice Investments and DRDGOLD
The main advantage of trading using opposite HomeChoice Investments and DRDGOLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeChoice Investments position performs unexpectedly, DRDGOLD 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 DRDGOLD will offset losses from the drop in DRDGOLD's long position.| HomeChoice Investments vs. Foschini Group | HomeChoice Investments vs. Sasol Ltd Bee | HomeChoice Investments vs. Centaur Bci Balanced | HomeChoice Investments vs. Growthpoint Properties |
| DRDGOLD vs. Trematon Capital Investments | DRDGOLD vs. CA Sales Holdings | DRDGOLD vs. Astoria Investments | DRDGOLD vs. Afine Investments |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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