Correlation Between African Media and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both African Media 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 African Media and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between African Media Entertainment and Harmony Gold Mining, you can compare the effects of market volatilities on African Media 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 African Media with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Media and Harmony Gold.
Diversification Opportunities for African Media and Harmony Gold
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between African and Harmony is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment 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 African Media 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 African Media Entertainment 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 African Media i.e., African Media and Harmony Gold go up and down completely randomly.
Pair Corralation between African Media and Harmony Gold
Assuming the 90 days trading horizon African Media Entertainment is expected to under-perform the Harmony Gold. In addition to that, African Media is 1.4 times more volatile than Harmony Gold Mining. It trades about -0.09 of its total potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.42 per unit of volatility. If you would invest 1,540,700 in Harmony Gold Mining on October 22, 2024 and sell it today you would earn a total of 302,300 from holding Harmony Gold Mining or generate 19.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
African Media Entertainment vs. Harmony Gold Mining
Performance |
| Timeline |
| African Media Entert |
| Harmony Gold Mining |
African Media and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Media and Harmony Gold
The main advantage of trading using opposite African Media and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Media 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.| African Media vs. Harmony Gold Mining | African Media vs. Lesaka Technologies | African Media vs. Astral Foods | African Media vs. eMedia Holdings Limited |
| Harmony Gold vs. Life Healthcare | Harmony Gold vs. Lesaka Technologies | Harmony Gold vs. RCL Foods | Harmony Gold vs. Deneb Investments |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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