Correlation Between Harmony Gold and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on Harmony Gold and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Summit Materials.
Diversification Opportunities for Harmony Gold and Summit Materials
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harmony and Summit is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Harmony Gold i.e., Harmony Gold and Summit Materials go up and down completely randomly.
Pair Corralation between Harmony Gold and Summit Materials
Assuming the 90 days horizon Harmony Gold is expected to generate 2.11 times less return on investment than Summit Materials. In addition to that, Harmony Gold is 1.84 times more volatile than Summit Materials. It trades about 0.05 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.19 per unit of volatility. If you would invest 4,580 in Summit Materials on October 17, 2024 and sell it today you would earn a total of 470.00 from holding Summit Materials or generate 10.26% 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. Summit Materials
Performance |
| Timeline |
| Harmony Gold Mining |
| Summit Materials |
Harmony Gold and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Summit Materials
The main advantage of trading using opposite Harmony Gold and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Harmony Gold vs. Shenandoah Telecommunications | Harmony Gold vs. Charter Communications | Harmony Gold vs. Zoom Video Communications | Harmony Gold vs. PARKEN Sport Entertainment |
| Summit Materials vs. Harmony Gold Mining | Summit Materials vs. FIREWEED METALS P | Summit Materials vs. ARDAGH METAL PACDL 0001 | Summit Materials vs. Plastic Omnium |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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