Correlation Between GMS and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both GMS 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 GMS and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Harmony Gold Mining, you can compare the effects of market volatilities on GMS 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 GMS with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Harmony Gold.
Diversification Opportunities for GMS and Harmony Gold
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GMS and Harmony is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc 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 GMS 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 GMS Inc 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 GMS i.e., GMS and Harmony Gold go up and down completely randomly.
Pair Corralation between GMS and Harmony Gold
Considering the 90-day investment horizon GMS is expected to generate 1.54 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, GMS Inc is 1.71 times less risky than Harmony Gold. It trades about 0.09 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 342.00 in Harmony Gold Mining on August 27, 2024 and sell it today you would earn a total of 621.00 from holding Harmony Gold Mining or generate 181.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMS Inc vs. Harmony Gold Mining
Performance |
| Timeline |
| GMS Inc |
| Harmony Gold Mining |
GMS and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Harmony Gold
The main advantage of trading using opposite GMS and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS 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.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |