Correlation Between Spirent Communications and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Harmony Gold Mining, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Harmony Gold.
Diversification Opportunities for Spirent Communications and Harmony Gold
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spirent and Harmony is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc 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 Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and Harmony Gold go up and down completely randomly.
Pair Corralation between Spirent Communications and Harmony Gold
Assuming the 90 days horizon Spirent Communications is expected to generate 9.25 times less return on investment than Harmony Gold. In addition to that, Spirent Communications is 1.25 times more volatile than Harmony Gold Mining. It trades about 0.01 of its total potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.08 per unit of volatility. If you would invest 309.00 in Harmony Gold Mining on September 14, 2024 and sell it today you would earn a total of 556.00 from holding Harmony Gold Mining or generate 179.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Harmony Gold Mining
Performance |
| Timeline |
| Spirent Communications |
| Harmony Gold Mining |
Spirent Communications and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Harmony Gold
The main advantage of trading using opposite Spirent Communications and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. SERI INDUSTRIAL EO | Spirent Communications vs. LION ONE METALS | Spirent Communications vs. AWILCO DRILLING PLC | Spirent Communications vs. GALENA MINING LTD |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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