Correlation Between Harmony Gold and United Internet
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and United Internet 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 United Internet 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 United Internet AG, you can compare the effects of market volatilities on Harmony Gold and United Internet 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 United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and United Internet.
Diversification Opportunities for Harmony Gold and United Internet
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harmony and United is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Harmony Gold i.e., Harmony Gold and United Internet go up and down completely randomly.
Pair Corralation between Harmony Gold and United Internet
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 2.14 times more return on investment than United Internet. However, Harmony Gold is 2.14 times more volatile than United Internet AG. It trades about 0.07 of its potential returns per unit of risk. United Internet AG is currently generating about -0.09 per unit of risk. If you would invest 830.00 in Harmony Gold Mining on October 16, 2024 and sell it today you would earn a total of 50.00 from holding Harmony Gold Mining or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. United Internet AG
Performance |
| Timeline |
| Harmony Gold Mining |
| United Internet AG |
Harmony Gold and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and United Internet
The main advantage of trading using opposite Harmony Gold and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, United Internet 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 United Internet will offset losses from the drop in United Internet's long position.| Harmony Gold vs. Shenandoah Telecommunications | Harmony Gold vs. Charter Communications | Harmony Gold vs. Zoom Video Communications | Harmony Gold vs. PARKEN Sport Entertainment |
| United Internet vs. De Grey Mining | United Internet vs. Canadian Utilities Limited | United Internet vs. United Utilities Group | United Internet 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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