Correlation Between Harmony Gold and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks PLC, you can compare the effects of market volatilities on Harmony Gold and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Fevertree Drinks.
Diversification Opportunities for Harmony Gold and Fevertree Drinks
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Harmony and Fevertree is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of Harmony Gold i.e., Harmony Gold and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Harmony Gold and Fevertree Drinks
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 0.44 times more return on investment than Fevertree Drinks. However, Harmony Gold Mining is 2.29 times less risky than Fevertree Drinks. It trades about 0.7 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about 0.2 per unit of risk. If you would invest 795.00 in Harmony Gold Mining on November 6, 2024 and sell it today you would earn a total of 305.00 from holding Harmony Gold Mining or generate 38.36% 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. Fevertree Drinks PLC
Performance |
| Timeline |
| Harmony Gold Mining |
| Fevertree Drinks PLC |
Harmony Gold and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Fevertree Drinks
The main advantage of trading using opposite Harmony Gold and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Harmony Gold vs. SK TELECOM TDADR | Harmony Gold vs. COMBA TELECOM SYST | Harmony Gold vs. Comba Telecom Systems | Harmony Gold vs. QBE Insurance Group |
| Fevertree Drinks vs. Pentair plc | Fevertree Drinks vs. BANKINTER ADR 2007 | Fevertree Drinks vs. BANK OF CHINA | Fevertree Drinks vs. TFS FINANCIAL |
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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