Correlation Between Harmony Gold and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and MagnaChip Semiconductor 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 MagnaChip Semiconductor 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 MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on Harmony Gold and MagnaChip Semiconductor 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 MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and MagnaChip Semiconductor.
Diversification Opportunities for Harmony Gold and MagnaChip Semiconductor
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Harmony and MagnaChip is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor 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 MagnaChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MagnaChip Semiconductor has no effect on the direction of Harmony Gold i.e., Harmony Gold and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Harmony Gold and MagnaChip Semiconductor
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 1.15 times more return on investment than MagnaChip Semiconductor. However, Harmony Gold is 1.15 times more volatile than MagnaChip Semiconductor Corp. It trades about 0.07 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.02 per unit of risk. If you would invest 805.00 in Harmony Gold Mining on October 26, 2024 and sell it today you would earn a total of 185.00 from holding Harmony Gold Mining or generate 22.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| Harmony Gold Mining |
| MagnaChip Semiconductor |
Harmony Gold and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and MagnaChip Semiconductor
The main advantage of trading using opposite Harmony Gold and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, MagnaChip Semiconductor 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 MagnaChip Semiconductor will offset losses from the drop in MagnaChip Semiconductor's long position.| Harmony Gold vs. ZIJIN MINH UNSPADR20 | Harmony Gold vs. Newmont | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. Origin Agritech |
| MagnaChip Semiconductor vs. ZINC MEDIA GR | MagnaChip Semiconductor vs. ANTA SPORTS PRODUCT | MagnaChip Semiconductor vs. Harmony Gold Mining | MagnaChip Semiconductor 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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