Correlation Between Bytes Technology and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Bytes Technology 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 Bytes Technology and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bytes Technology and Harmony Gold Mining, you can compare the effects of market volatilities on Bytes Technology 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 Bytes Technology with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bytes Technology and Harmony Gold.
Diversification Opportunities for Bytes Technology and Harmony Gold
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bytes and Harmony is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bytes Technology 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 Bytes Technology 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 Bytes Technology 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 Bytes Technology i.e., Bytes Technology and Harmony Gold go up and down completely randomly.
Pair Corralation between Bytes Technology and Harmony Gold
Assuming the 90 days trading horizon Bytes Technology is expected to generate 62.61 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Bytes Technology is 1.46 times less risky than Harmony Gold. It trades about 0.01 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 1,566,800 in Harmony Gold Mining on October 25, 2024 and sell it today you would earn a total of 396,100 from holding Harmony Gold Mining or generate 25.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bytes Technology vs. Harmony Gold Mining
Performance |
| Timeline |
| Bytes Technology |
| Harmony Gold Mining |
Bytes Technology and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bytes Technology and Harmony Gold
The main advantage of trading using opposite Bytes Technology and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bytes Technology 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.| Bytes Technology vs. Kap Industrial Holdings | Bytes Technology vs. Deneb Investments | Bytes Technology vs. Zeder Investments | Bytes Technology vs. Frontier Transport Holdings |
| Harmony Gold vs. Nedbank Group | Harmony Gold vs. HomeChoice Investments | Harmony Gold vs. Bytes Technology | Harmony Gold vs. eMedia Holdings Limited |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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