Correlation Between West African and DRDGOLD Limited
Can any of the company-specific risk be diversified away by investing in both West African and DRDGOLD Limited 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 West African and DRDGOLD Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between West African Resources and DRDGOLD Limited ADR, you can compare the effects of market volatilities on West African and DRDGOLD Limited 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 West African with a short position of DRDGOLD Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of West African and DRDGOLD Limited.
Diversification Opportunities for West African and DRDGOLD Limited
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between West and DRDGOLD is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding West African Resources and DRDGOLD Limited ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRDGOLD Limited ADR and West African 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 West African Resources are associated (or correlated) with DRDGOLD Limited. 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 ADR has no effect on the direction of West African i.e., West African and DRDGOLD Limited go up and down completely randomly.
Pair Corralation between West African and DRDGOLD Limited
Assuming the 90 days horizon West African Resources is expected to generate 3.49 times more return on investment than DRDGOLD Limited. However, West African is 3.49 times more volatile than DRDGOLD Limited ADR. It trades about 0.06 of its potential returns per unit of risk. DRDGOLD Limited ADR is currently generating about 0.04 per unit of risk. If you would invest 71.00 in West African Resources on November 2, 2024 and sell it today you would earn a total of 29.00 from holding West African Resources or generate 40.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.4% |
| Values | Daily Returns |
West African Resources vs. DRDGOLD Limited ADR
Performance |
| Timeline |
| West African Resources |
| DRDGOLD Limited ADR |
West African and DRDGOLD Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with West African and DRDGOLD Limited
The main advantage of trading using opposite West African and DRDGOLD Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if West African position performs unexpectedly, DRDGOLD Limited 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 Limited will offset losses from the drop in DRDGOLD Limited's long position.| West African vs. Harmony Gold Mining | West African vs. AngloGold Ashanti plc | West African vs. Gold Fields Ltd | West African vs. Kinross Gold |
| DRDGOLD Limited vs. Osisko Gold Ro | DRDGOLD Limited vs. Eldorado Gold Corp | DRDGOLD Limited vs. SSR Mining | DRDGOLD Limited vs. Idaho Strategic 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |