Correlation Between DRDGOLD Limited and Osisko Gold

Can any of the company-specific risk be diversified away by investing in both DRDGOLD Limited and Osisko Gold 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 Osisko Gold 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 Osisko Gold Ro, you can compare the effects of market volatilities on DRDGOLD Limited and Osisko Gold 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 Osisko Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRDGOLD Limited and Osisko Gold.

Diversification Opportunities for DRDGOLD Limited and Osisko Gold

0.7

Correlation Coefficient

DRDGOLD Limited  Osisko Gold

Poor diversification

The 3 months correlation between DRDGOLD and Osisko is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding DRDGOLD Limited ADR and Osisko Gold Ro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osisko Gold Ro 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 Osisko Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osisko Gold Ro has no effect on the direction of DRDGOLD Limited i.e., DRDGOLD Limited and Osisko Gold go up and down completely randomly.

Pair Corralation between DRDGOLD Limited and Osisko Gold

Considering the 90-day investment horizon DRDGOLD Limited ADR is expected to generate 1.6 times more return on investment than Osisko Gold. However, DRDGOLD Limited is 1.6 times more volatile than Osisko Gold Ro. It trades about 0.04 of its potential returns per unit of risk. Osisko Gold Ro is currently generating about 0.05 per unit of risk. If you would invest  690.00  in DRDGOLD Limited ADR on November 20, 2024 and sell it today you would earn a total of  342.00  from holding DRDGOLD Limited ADR or generate 49.57% 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.  Osisko Gold Ro

DRDGOLD Limited ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DRDGOLD Limited ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, DRDGOLD Limited may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Osisko Gold Ro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Osisko Gold Ro has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Osisko Gold is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with DRDGOLD Limited and Osisko Gold

The main advantage of trading using opposite DRDGOLD Limited and Osisko Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRDGOLD Limited position performs unexpectedly, Osisko Gold 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 Osisko Gold will offset losses from the drop in Osisko Gold's long position.

The idea behind DRDGOLD Limited ADR and Osisko Gold Ro pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.