Correlation Between DRDGOLD Limited and GoldMining

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

Diversification Opportunities for DRDGOLD Limited and GoldMining

0.55

Correlation Coefficient

DRDGOLD Limited  GoldMining

Very weak diversification

The 3 months correlation between DRDGOLD and GoldMining is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding DRDGOLD Limited ADR and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of DRDGOLD Limited i.e., DRDGOLD Limited and GoldMining go up and down completely randomly.

Pair Corralation between DRDGOLD Limited and GoldMining

Considering the 90-day investment horizon DRDGOLD Limited ADR is expected to under-perform the GoldMining. In addition to that, DRDGOLD Limited is 1.47 times more volatile than GoldMining. It trades about -0.02 of its total potential returns per unit of risk. GoldMining is currently generating about 0.06 per unit of volatility. If you would invest  77.00  in GoldMining on April 30, 2025 and sell it today you would earn a total of  5.00  from holding GoldMining or generate 6.49% return on investment over 90 days.

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

DRDGOLD Limited ADR  vs.  GoldMining

DRDGOLD Limited ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days DRDGOLD Limited ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, DRDGOLD Limited is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

GoldMining

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GoldMining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, GoldMining may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with DRDGOLD Limited and GoldMining

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

The idea behind DRDGOLD Limited ADR and GoldMining 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.