Correlation Between Central Puerto and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Central Puerto 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 Central Puerto and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Puerto SA and Harmony Gold Mining, you can compare the effects of market volatilities on Central Puerto 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 Central Puerto with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Puerto and Harmony Gold.
Diversification Opportunities for Central Puerto and Harmony Gold
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Central and Harmony is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Central Puerto SA 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 Central Puerto 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 Central Puerto SA 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 Central Puerto i.e., Central Puerto and Harmony Gold go up and down completely randomly.
Pair Corralation between Central Puerto and Harmony Gold
Assuming the 90 days trading horizon Central Puerto SA is expected to generate 0.8 times more return on investment than Harmony Gold. However, Central Puerto SA is 1.26 times less risky than Harmony Gold. It trades about 0.27 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.27 per unit of risk. If you would invest 130,500 in Central Puerto SA on September 1, 2024 and sell it today you would earn a total of 21,000 from holding Central Puerto SA or generate 16.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Puerto SA vs. Harmony Gold Mining
Performance |
| Timeline |
| Central Puerto SA |
| Harmony Gold Mining |
Central Puerto and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Puerto and Harmony Gold
The main advantage of trading using opposite Central Puerto and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Puerto 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.| Central Puerto vs. Empresa Distribuidora Electrica | Central Puerto vs. Longvie SA | Central Puerto vs. American Express Co | Central Puerto vs. United States Steel |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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