Correlation Between GlaxoSmithKline PLC and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC 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 GlaxoSmithKline PLC and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlaxoSmithKline PLC ADR and Harmony Gold Mining, you can compare the effects of market volatilities on GlaxoSmithKline PLC 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 GlaxoSmithKline PLC with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Harmony Gold.
Diversification Opportunities for GlaxoSmithKline PLC and Harmony Gold
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Harmony is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR 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 GlaxoSmithKline PLC 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 GlaxoSmithKline PLC ADR 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 GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Harmony Gold go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Harmony Gold
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 38.33 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 4.48 times less risky than Harmony Gold. It trades about 0.01 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 202.00 in Harmony Gold Mining on August 24, 2024 and sell it today you would earn a total of 748.00 from holding Harmony Gold Mining or generate 370.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 65.52% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Harmony Gold Mining
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Harmony Gold Mining |
GlaxoSmithKline PLC and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Harmony Gold
The main advantage of trading using opposite GlaxoSmithKline PLC and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC 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.| GlaxoSmithKline PLC vs. Novartis AG ADR | GlaxoSmithKline PLC vs. AstraZeneca PLC ADR | GlaxoSmithKline PLC vs. Roche Holding Ltd | GlaxoSmithKline PLC vs. Bristol Myers Squibb |
| Harmony Gold vs. NH Foods Ltd | Harmony Gold vs. Relx PLC ADR | Harmony Gold vs. Ihuman Inc | Harmony Gold vs. Delta Air Lines |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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