Correlation Between Distribuidora and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Distribuidora 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 Distribuidora and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Distribuidora de Gas and Harmony Gold Mining, you can compare the effects of market volatilities on Distribuidora 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 Distribuidora with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distribuidora and Harmony Gold.
Diversification Opportunities for Distribuidora and Harmony Gold
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Distribuidora and Harmony is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Distribuidora de Gas 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 Distribuidora 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 Distribuidora de Gas 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 Distribuidora i.e., Distribuidora and Harmony Gold go up and down completely randomly.
Pair Corralation between Distribuidora and Harmony Gold
Assuming the 90 days trading horizon Distribuidora de Gas is expected to generate 0.9 times more return on investment than Harmony Gold. However, Distribuidora de Gas is 1.11 times less risky than Harmony Gold. It trades about 0.13 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.0 per unit of risk. If you would invest 117,550 in Distribuidora de Gas on September 1, 2024 and sell it today you would earn a total of 75,950 from holding Distribuidora de Gas or generate 64.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Distribuidora de Gas vs. Harmony Gold Mining
Performance |
| Timeline |
| Distribuidora de Gas |
| Harmony Gold Mining |
Distribuidora and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Distribuidora and Harmony Gold
The main advantage of trading using opposite Distribuidora and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distribuidora 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.| Distribuidora vs. Compania de Transporte | Distribuidora vs. Telecom Argentina | Distribuidora vs. United States Steel | Distribuidora 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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