Correlation Between Harmony Gold and ARISTOCRAT LEISURE
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE, you can compare the effects of market volatilities on Harmony Gold and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and ARISTOCRAT LEISURE.
Diversification Opportunities for Harmony Gold and ARISTOCRAT LEISURE
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Harmony and ARISTOCRAT is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and ARISTOCRAT LEISURE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARISTOCRAT LEISURE has no effect on the direction of Harmony Gold i.e., Harmony Gold and ARISTOCRAT LEISURE go up and down completely randomly.
Pair Corralation between Harmony Gold and ARISTOCRAT LEISURE
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 2.96 times more return on investment than ARISTOCRAT LEISURE. However, Harmony Gold is 2.96 times more volatile than ARISTOCRAT LEISURE. It trades about 0.07 of its potential returns per unit of risk. ARISTOCRAT LEISURE is currently generating about 0.15 per unit of risk. If you would invest 476.00 in Harmony Gold Mining on August 29, 2024 and sell it today you would earn a total of 454.00 from holding Harmony Gold Mining or generate 95.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. ARISTOCRAT LEISURE
Performance |
| Timeline |
| Harmony Gold Mining |
| ARISTOCRAT LEISURE |
Harmony Gold and ARISTOCRAT LEISURE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and ARISTOCRAT LEISURE
The main advantage of trading using opposite Harmony Gold and ARISTOCRAT LEISURE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE will offset losses from the drop in ARISTOCRAT LEISURE's long position.| Harmony Gold vs. Franco Nevada | Harmony Gold vs. Agnico Eagle Mines | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. NMI Holdings |
| ARISTOCRAT LEISURE vs. INDOFOOD AGRI RES | ARISTOCRAT LEISURE vs. Datadog | ARISTOCRAT LEISURE vs. AUSTEVOLL SEAFOOD | ARISTOCRAT LEISURE vs. TYSON FOODS A |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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