Correlation Between Drdgold and Colgate Palmolive

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

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

Diversification Opportunities for Drdgold and Colgate Palmolive

-0.83

Correlation Coefficient

Drdgold  Colgate Palmolive

Pay attention - limited upside

The 3 months correlation between Drdgold and Colgate is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Drdgold and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive and Drdgold 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 are associated (or correlated) with Colgate Palmolive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colgate Palmolive has no effect on the direction of Drdgold i.e., Drdgold and Colgate Palmolive go up and down completely randomly.

Pair Corralation between Drdgold and Colgate Palmolive

Assuming the 90 days horizon Drdgold is expected to generate 5.29 times more return on investment than Colgate Palmolive. However, Drdgold is 5.29 times more volatile than Colgate Palmolive. It trades about 0.19 of its potential returns per unit of risk. Colgate Palmolive is currently generating about -0.08 per unit of risk. If you would invest  138.00  in Drdgold on August 14, 2025 and sell it today you would earn a total of  118.00  from holding Drdgold or generate 85.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Drdgold  vs.  Colgate Palmolive

Drdgold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Drdgold are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Drdgold reported solid returns over the last few months and may actually be approaching a breakup point.

Colgate Palmolive

Risk-Adjusted Performance

Weakest

Over the last 90 days Colgate Palmolive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Colgate Palmolive is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Drdgold and Colgate Palmolive

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

The idea behind Drdgold and Colgate Palmolive 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.