Correlation Between Harmony Gold and Aluminumof China
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Aluminumof China 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 Aluminumof China 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 Aluminum of, you can compare the effects of market volatilities on Harmony Gold and Aluminumof China 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 Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Aluminumof China.
Diversification Opportunities for Harmony Gold and Aluminumof China
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Harmony and Aluminumof is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China 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 Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of Harmony Gold i.e., Harmony Gold and Aluminumof China go up and down completely randomly.
Pair Corralation between Harmony Gold and Aluminumof China
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 0.86 times more return on investment than Aluminumof China. However, Harmony Gold Mining is 1.16 times less risky than Aluminumof China. It trades about 0.4 of its potential returns per unit of risk. Aluminum of is currently generating about 0.24 per unit of risk. If you would invest 780.00 in Harmony Gold Mining on October 24, 2024 and sell it today you would earn a total of 155.00 from holding Harmony Gold Mining or generate 19.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Aluminum of
Performance |
| Timeline |
| Harmony Gold Mining |
| Aluminumof China |
Harmony Gold and Aluminumof China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Aluminumof China
The main advantage of trading using opposite Harmony Gold and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China's long position.| Harmony Gold vs. QBE Insurance Group | Harmony Gold vs. RYANAIR HLDGS ADR | Harmony Gold vs. CHINA SOUTHN AIR H | Harmony Gold vs. HANOVER INSURANCE |
| Aluminumof China vs. Harmony Gold Mining | Aluminumof China vs. THRACE PLASTICS | Aluminumof China vs. Vulcan Materials | Aluminumof China vs. Scandinavian Tobacco Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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