Correlation Between TRAINLINE PLC and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and Harmony 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 TRAINLINE PLC and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and Harmony Gold Mining, you can compare the effects of market volatilities on TRAINLINE PLC and Harmony 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 TRAINLINE PLC with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and Harmony Gold.
Diversification Opportunities for TRAINLINE PLC and Harmony Gold
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between TRAINLINE and Harmony is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining and TRAINLINE PLC 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 TRAINLINE PLC LS are associated (or correlated) with Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and Harmony Gold go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and Harmony Gold
Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to generate 0.59 times more return on investment than Harmony Gold. However, TRAINLINE PLC LS is 1.71 times less risky than Harmony Gold. It trades about 0.2 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.05 per unit of risk. If you would invest 468.00 in TRAINLINE PLC LS on September 12, 2024 and sell it today you would earn a total of 37.00 from holding TRAINLINE PLC LS or generate 7.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRAINLINE PLC LS vs. Harmony Gold Mining
Performance |
| Timeline |
| TRAINLINE PLC LS |
| Harmony Gold Mining |
TRAINLINE PLC and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAINLINE PLC and Harmony Gold
The main advantage of trading using opposite TRAINLINE PLC and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC position performs unexpectedly, Harmony 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| TRAINLINE PLC vs. TRAVEL LEISURE DL 01 | TRAINLINE PLC vs. TripAdvisor | TRAINLINE PLC vs. Superior Plus Corp | TRAINLINE PLC vs. SIVERS SEMICONDUCTORS AB |
| Harmony Gold vs. Franco Nevada | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. SIVERS SEMICONDUCTORS AB | Harmony Gold vs. Norsk Hydro ASA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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