Correlation Between ASA Gold and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both ASA Gold 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 ASA Gold and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASA Gold and and Harmony Gold Mining, you can compare the effects of market volatilities on ASA Gold 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 ASA Gold with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASA Gold and Harmony Gold.
Diversification Opportunities for ASA Gold and Harmony Gold
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ASA and Harmony is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ASA Gold and 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 ASA Gold 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 ASA Gold and 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 ASA Gold i.e., ASA Gold and Harmony Gold go up and down completely randomly.
Pair Corralation between ASA Gold and Harmony Gold
Considering the 90-day investment horizon ASA Gold and is expected to generate 0.57 times more return on investment than Harmony Gold. However, ASA Gold and is 1.75 times less risky than Harmony Gold. It trades about 0.02 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.17 per unit of risk. If you would invest 2,017 in ASA Gold and on September 20, 2024 and sell it today you would earn a total of 11.00 from holding ASA Gold and or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASA Gold and vs. Harmony Gold Mining
Performance |
| Timeline |
| ASA Gold |
| Harmony Gold Mining |
ASA Gold and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASA Gold and Harmony Gold
The main advantage of trading using opposite ASA Gold and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASA Gold 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.| ASA Gold vs. AngloGold Ashanti plc | ASA Gold vs. Sprott Physical Gold | ASA Gold vs. Gold Fields Ltd | ASA Gold vs. Harmony Gold Mining |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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