Correlation Between Sibanye Stillwater and DRDGOLD
Can any of the company-specific risk be diversified away by investing in both Sibanye Stillwater 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 Sibanye Stillwater and DRDGOLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sibanye Stillwater and DRDGOLD Limited, you can compare the effects of market volatilities on Sibanye Stillwater 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 Sibanye Stillwater with a short position of DRDGOLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sibanye Stillwater and DRDGOLD.
Diversification Opportunities for Sibanye Stillwater and DRDGOLD
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sibanye and DRDGOLD is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sibanye Stillwater and DRDGOLD Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRDGOLD Limited and Sibanye Stillwater 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 Sibanye Stillwater 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 Sibanye Stillwater i.e., Sibanye Stillwater and DRDGOLD go up and down completely randomly.
Pair Corralation between Sibanye Stillwater and DRDGOLD
Assuming the 90 days trading horizon Sibanye Stillwater is expected to under-perform the DRDGOLD. In addition to that, Sibanye Stillwater is 1.42 times more volatile than DRDGOLD Limited. It trades about 0.0 of its total potential returns per unit of risk. DRDGOLD Limited is currently generating about 0.02 per unit of volatility. If you would invest 164,400 in DRDGOLD Limited on September 2, 2024 and sell it today you would earn a total of 12,600 from holding DRDGOLD Limited or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sibanye Stillwater vs. DRDGOLD Limited
Performance |
| Timeline |
| Sibanye Stillwater |
| DRDGOLD Limited |
Sibanye Stillwater and DRDGOLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sibanye Stillwater and DRDGOLD
The main advantage of trading using opposite Sibanye Stillwater and DRDGOLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sibanye Stillwater 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.| Sibanye Stillwater vs. Kumba Iron Ore | Sibanye Stillwater vs. Reinet Investments SCA | Sibanye Stillwater vs. Harmony Gold Mining | Sibanye Stillwater vs. Safari Investments RSA |
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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