Correlation Between Harmony Gold and Chongqing Machinery
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Chongqing Machinery 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 Chongqing Machinery 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 Chongqing Machinery Electric, you can compare the effects of market volatilities on Harmony Gold and Chongqing Machinery 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 Chongqing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Chongqing Machinery.
Diversification Opportunities for Harmony Gold and Chongqing Machinery
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Harmony and Chongqing is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Chongqing Machinery Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Machinery 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 Chongqing Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Machinery has no effect on the direction of Harmony Gold i.e., Harmony Gold and Chongqing Machinery go up and down completely randomly.
Pair Corralation between Harmony Gold and Chongqing Machinery
Assuming the 90 days horizon Harmony Gold is expected to generate 1.64 times less return on investment than Chongqing Machinery. But when comparing it to its historical volatility, Harmony Gold Mining is 1.78 times less risky than Chongqing Machinery. It trades about 0.08 of its potential returns per unit of risk. Chongqing Machinery Electric is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.17 in Chongqing Machinery Electric on September 12, 2024 and sell it today you would earn a total of 6.48 from holding Chongqing Machinery Electric or generate 298.62% 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. Chongqing Machinery Electric
Performance |
| Timeline |
| Harmony Gold Mining |
| Chongqing Machinery |
Harmony Gold and Chongqing Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Chongqing Machinery
The main advantage of trading using opposite Harmony Gold and Chongqing Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Chongqing Machinery 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 Chongqing Machinery will offset losses from the drop in Chongqing Machinery's long position.| Harmony Gold vs. Franco Nevada | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. SIVERS SEMICONDUCTORS AB | Harmony Gold vs. Norsk Hydro ASA |
| Chongqing Machinery vs. Schneider Electric SE | Chongqing Machinery vs. Superior Plus Corp | Chongqing Machinery vs. SIVERS SEMICONDUCTORS AB | Chongqing Machinery vs. Norsk Hydro ASA |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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