Correlation Between Harmony Gold and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Equinor ASA 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 Equinor ASA 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 Equinor ASA, you can compare the effects of market volatilities on Harmony Gold and Equinor ASA 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 Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Equinor ASA.
Diversification Opportunities for Harmony Gold and Equinor ASA
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Harmony and Equinor is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Equinor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA 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 Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA has no effect on the direction of Harmony Gold i.e., Harmony Gold and Equinor ASA go up and down completely randomly.
Pair Corralation between Harmony Gold and Equinor ASA
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 1.19 times more return on investment than Equinor ASA. However, Harmony Gold is 1.19 times more volatile than Equinor ASA. It trades about 0.5 of its potential returns per unit of risk. Equinor ASA is currently generating about 0.12 per unit of risk. If you would invest 770.00 in Harmony Gold Mining on October 28, 2024 and sell it today you would earn a total of 220.00 from holding Harmony Gold Mining or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Equinor ASA
Performance |
| Timeline |
| Harmony Gold Mining |
| Equinor ASA |
Harmony Gold and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Equinor ASA
The main advantage of trading using opposite Harmony Gold and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Equinor ASA 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 Equinor ASA will offset losses from the drop in Equinor ASA's long position.| Harmony Gold vs. ZIJIN MINH UNSPADR20 | Harmony Gold vs. Newmont | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. Origin Agritech |
| Equinor ASA vs. ANTA SPORTS PRODUCT | Equinor ASA vs. Tencent Music Entertainment | Equinor ASA vs. Prosiebensat 1 Media | Equinor ASA vs. RCS MediaGroup SpA |
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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