Correlation Between Harmony Gold and Lam Research
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Lam Research 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 Lam Research 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 Lam Research, you can compare the effects of market volatilities on Harmony Gold and Lam Research 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 Lam Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Lam Research.
Diversification Opportunities for Harmony Gold and Lam Research
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Harmony and Lam is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Lam Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Research 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 Lam Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Research has no effect on the direction of Harmony Gold i.e., Harmony Gold and Lam Research go up and down completely randomly.
Pair Corralation between Harmony Gold and Lam Research
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 1.48 times more return on investment than Lam Research. However, Harmony Gold is 1.48 times more volatile than Lam Research. It trades about 0.07 of its potential returns per unit of risk. Lam Research is currently generating about 0.04 per unit of risk. If you would invest 417.00 in Harmony Gold Mining on August 31, 2024 and sell it today you would earn a total of 428.00 from holding Harmony Gold Mining or generate 102.64% 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. Lam Research
Performance |
| Timeline |
| Harmony Gold Mining |
| Lam Research |
Harmony Gold and Lam Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Lam Research
The main advantage of trading using opposite Harmony Gold and Lam Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Lam Research 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 Lam Research will offset losses from the drop in Lam Research's long position.| Harmony Gold vs. ZIJIN MINH UNSPADR20 | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. NMI Holdings | Harmony Gold vs. Origin Agritech |
| Lam Research vs. ASML Holding NV | Lam Research vs. Superior Plus Corp | Lam Research vs. NMI Holdings | Lam Research vs. Origin Agritech |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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