Correlation Between Harmony Gold and Broadcom
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Broadcom 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 Harmony Gold and Broadcom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harmony Gold Mining and Broadcom, you can compare the effects of market volatilities on Harmony Gold and Broadcom 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 Harmony Gold with a short position of Broadcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Broadcom.
Diversification Opportunities for Harmony Gold and Broadcom
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harmony and Broadcom is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Broadcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadcom and Harmony Gold 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 Harmony Gold Mining are associated (or correlated) with Broadcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadcom has no effect on the direction of Harmony Gold i.e., Harmony Gold and Broadcom go up and down completely randomly.
Pair Corralation between Harmony Gold and Broadcom
Assuming the 90 days horizon Harmony Gold is expected to generate 14.06 times less return on investment than Broadcom. But when comparing it to its historical volatility, Harmony Gold Mining is 1.01 times less risky than Broadcom. It trades about 0.01 of its potential returns per unit of risk. Broadcom is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 12,232 in Broadcom on October 12, 2024 and sell it today you would earn a total of 9,833 from holding Broadcom or generate 80.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Broadcom
Performance |
| Timeline |
| Harmony Gold Mining |
| Broadcom |
Harmony Gold and Broadcom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Broadcom
The main advantage of trading using opposite Harmony Gold and Broadcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Broadcom 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 Broadcom will offset losses from the drop in Broadcom's long position.| Harmony Gold vs. Corporate Office Properties | Harmony Gold vs. SILVER BULLET DATA | Harmony Gold vs. alstria office REIT AG | Harmony Gold vs. CITY OFFICE REIT |
| Broadcom vs. G III Apparel Group | Broadcom vs. NORTHEAST UTILITIES | Broadcom vs. ALGOMA STEEL GROUP | Broadcom vs. COSMOSTEEL HLDGS |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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