Correlation Between EDP - and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both EDP - 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 EDP - and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EDP Energias and Harmony Gold Mining, you can compare the effects of market volatilities on EDP - 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 EDP - with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of EDP - and Harmony Gold.
Diversification Opportunities for EDP - and Harmony Gold
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between EDP and Harmony is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding EDP Energias 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 EDP - 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 EDP Energias 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 EDP - i.e., EDP - and Harmony Gold go up and down completely randomly.
Pair Corralation between EDP - and Harmony Gold
Assuming the 90 days trading horizon EDP - is expected to generate 37.46 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, EDP Energias is 2.25 times less risky than Harmony Gold. It trades about 0.0 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 805.00 in Harmony Gold Mining on September 3, 2024 and sell it today you would earn a total of 45.00 from holding Harmony Gold Mining or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EDP Energias vs. Harmony Gold Mining
Performance |
| Timeline |
| EDP Energias |
| Harmony Gold Mining |
EDP - and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EDP - and Harmony Gold
The main advantage of trading using opposite EDP - and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EDP - 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.| EDP - vs. Harmony Gold Mining | EDP - vs. AIR PRODCHEMICALS | EDP - vs. Diamondrock Hospitality Co | EDP - vs. Jacquet Metal Service |
| Harmony Gold vs. ZIJIN MINH UNSPADR20 | Harmony Gold vs. Barrick Gold | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. NMI Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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