Correlation Between Harmony Gold and Renesas Electronics
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics, you can compare the effects of market volatilities on Harmony Gold and Renesas Electronics 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 Renesas Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Renesas Electronics.
Diversification Opportunities for Harmony Gold and Renesas Electronics
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harmony and Renesas is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Renesas Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics 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 Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics has no effect on the direction of Harmony Gold i.e., Harmony Gold and Renesas Electronics go up and down completely randomly.
Pair Corralation between Harmony Gold and Renesas Electronics
Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the Renesas Electronics. In addition to that, Harmony Gold is 1.26 times more volatile than Renesas Electronics. It trades about -0.17 of its total potential returns per unit of risk. Renesas Electronics is currently generating about -0.03 per unit of volatility. If you would invest 1,251 in Renesas Electronics on September 1, 2024 and sell it today you would lose (34.00) from holding Renesas Electronics or give up 2.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Renesas Electronics
Performance |
| Timeline |
| Harmony Gold Mining |
| Renesas Electronics |
Harmony Gold and Renesas Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Renesas Electronics
The main advantage of trading using opposite Harmony Gold and Renesas Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Renesas Electronics 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 Renesas Electronics will offset losses from the drop in Renesas Electronics' long position.| Harmony Gold vs. ZIJIN MINH UNSPADR20 | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. NMI Holdings | Harmony Gold vs. Origin Agritech |
| Renesas Electronics vs. Scientific Games | Renesas Electronics vs. The Hanover Insurance | Renesas Electronics vs. Boyd Gaming | Renesas Electronics vs. ZURICH INSURANCE GROUP |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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