Correlation Between Granite Construction and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Granite Construction 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 Granite Construction and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and Harmony Gold Mining, you can compare the effects of market volatilities on Granite Construction 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 Granite Construction with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Harmony Gold.
Diversification Opportunities for Granite Construction and Harmony Gold
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Granite and Harmony is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction 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 Granite Construction 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 Granite Construction 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 Granite Construction i.e., Granite Construction and Harmony Gold go up and down completely randomly.
Pair Corralation between Granite Construction and Harmony Gold
Assuming the 90 days trading horizon Granite Construction is expected to generate 0.88 times more return on investment than Harmony Gold. However, Granite Construction is 1.13 times less risky than Harmony Gold. It trades about 0.38 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.11 per unit of risk. If you would invest 7,600 in Granite Construction on August 28, 2024 and sell it today you would earn a total of 1,850 from holding Granite Construction or generate 24.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction vs. Harmony Gold Mining
Performance |
| Timeline |
| Granite Construction |
| Harmony Gold Mining |
Granite Construction and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Harmony Gold
The main advantage of trading using opposite Granite Construction and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction 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.| Granite Construction vs. Uber Technologies | Granite Construction vs. Avanos Medical | Granite Construction vs. MeVis Medical Solutions | Granite Construction vs. Apollo Medical Holdings |
| Harmony Gold vs. Franco Nevada | Harmony Gold vs. Agnico Eagle Mines | 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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