Correlation Between Harmony Gold and WESTLAKE CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL, you can compare the effects of market volatilities on Harmony Gold and WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and WESTLAKE CHEMICAL.
Diversification Opportunities for Harmony Gold and WESTLAKE CHEMICAL
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Harmony and WESTLAKE is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and WESTLAKE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTLAKE CHEMICAL has no effect on the direction of Harmony Gold i.e., Harmony Gold and WESTLAKE CHEMICAL go up and down completely randomly.
Pair Corralation between Harmony Gold and WESTLAKE CHEMICAL
Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the WESTLAKE CHEMICAL. In addition to that, Harmony Gold is 2.19 times more volatile than WESTLAKE CHEMICAL. It trades about -0.22 of its total potential returns per unit of risk. WESTLAKE CHEMICAL is currently generating about -0.03 per unit of volatility. If you would invest 12,249 in WESTLAKE CHEMICAL on August 30, 2024 and sell it today you would lose (149.00) from holding WESTLAKE CHEMICAL or give up 1.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. WESTLAKE CHEMICAL
Performance |
| Timeline |
| Harmony Gold Mining |
| WESTLAKE CHEMICAL |
Harmony Gold and WESTLAKE CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and WESTLAKE CHEMICAL
The main advantage of trading using opposite Harmony Gold and WESTLAKE CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL will offset losses from the drop in WESTLAKE CHEMICAL's long position.| Harmony Gold vs. Franco Nevada | Harmony Gold vs. Wheaton Precious Metals | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. NMI Holdings |
| WESTLAKE CHEMICAL vs. Suntory Beverage Food | WESTLAKE CHEMICAL vs. Lion One Metals | WESTLAKE CHEMICAL vs. Entravision Communications | WESTLAKE CHEMICAL vs. Harmony Gold Mining |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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