Correlation Between American Express and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both American Express 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 American Express and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express Co and Harmony Gold Mining, you can compare the effects of market volatilities on American Express 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 American Express with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Harmony Gold.
Diversification Opportunities for American Express and Harmony Gold
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Harmony is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding American Express Co 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 American Express 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 American Express Co 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 American Express i.e., American Express and Harmony Gold go up and down completely randomly.
Pair Corralation between American Express and Harmony Gold
Assuming the 90 days trading horizon American Express is expected to generate 1.11 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, American Express Co is 1.85 times less risky than Harmony Gold. It trades about 0.08 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,197,500 in Harmony Gold Mining on November 2, 2024 and sell it today you would earn a total of 140,000 from holding Harmony Gold Mining or generate 11.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express Co vs. Harmony Gold Mining
Performance |
| Timeline |
| American Express |
| Harmony Gold Mining |
American Express and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Harmony Gold
The main advantage of trading using opposite American Express and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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.| American Express vs. Transportadora de Gas | American Express vs. Agrometal SAI | American Express vs. Harmony Gold Mining | American Express vs. Telecom Argentina |
| Harmony Gold vs. Telecom Argentina | Harmony Gold vs. Transportadora de Gas | Harmony Gold vs. Agrometal SAI |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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