Correlation Between SentinelOne and DRDGOLD Limited

Can any of the company-specific risk be diversified away by investing in both SentinelOne 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 SentinelOne and DRDGOLD Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SentinelOne and DRDGOLD Limited ADR, you can compare the effects of market volatilities on SentinelOne 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 SentinelOne with a short position of DRDGOLD Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and DRDGOLD Limited.

Diversification Opportunities for SentinelOne and DRDGOLD Limited

-0.61

Correlation Coefficient

SentinelOne  DRDGOLD Limited

Excellent diversification

The 3 months correlation between SentinelOne and DRDGOLD is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne 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 SentinelOne 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 SentinelOne 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 SentinelOne i.e., SentinelOne and DRDGOLD Limited go up and down completely randomly.

Pair Corralation between SentinelOne and DRDGOLD Limited

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the DRDGOLD Limited. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 1.47 times less risky than DRDGOLD Limited. The stock trades about -0.11 of its potential returns per unit of risk. The DRDGOLD Limited ADR is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  858.00  in DRDGOLD Limited ADR on December 29, 2024 and sell it today you would earn a total of  625.00  from holding DRDGOLD Limited ADR or generate 72.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

SentinelOne  vs.  DRDGOLD Limited ADR

SentinelOne

Risk-Adjusted Performance

Very Weak

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

DRDGOLD Limited ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DRDGOLD Limited ADR are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, DRDGOLD Limited exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SentinelOne and DRDGOLD Limited

The main advantage of trading using opposite SentinelOne and DRDGOLD Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne 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.

The idea behind SentinelOne and DRDGOLD Limited ADR 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.