Correlation Between Harmony Gold and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and MELIA HOTELS 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 MELIA HOTELS 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 MELIA HOTELS, you can compare the effects of market volatilities on Harmony Gold and MELIA HOTELS 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 MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and MELIA HOTELS.
Diversification Opportunities for Harmony Gold and MELIA HOTELS
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Harmony and MELIA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS 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 MELIA HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MELIA HOTELS has no effect on the direction of Harmony Gold i.e., Harmony Gold and MELIA HOTELS go up and down completely randomly.
Pair Corralation between Harmony Gold and MELIA HOTELS
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 1.68 times more return on investment than MELIA HOTELS. However, Harmony Gold is 1.68 times more volatile than MELIA HOTELS. It trades about 0.11 of its potential returns per unit of risk. MELIA HOTELS is currently generating about 0.04 per unit of risk. If you would invest 312.00 in Harmony Gold Mining on September 12, 2024 and sell it today you would earn a total of 543.00 from holding Harmony Gold Mining or generate 174.04% 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. MELIA HOTELS
Performance |
| Timeline |
| Harmony Gold Mining |
| MELIA HOTELS |
Harmony Gold and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and MELIA HOTELS
The main advantage of trading using opposite Harmony Gold and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, MELIA HOTELS 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 MELIA HOTELS will offset losses from the drop in MELIA HOTELS'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 |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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