Correlation Between Harmony Gold and AECI
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and AECI 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 AECI 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 AECI, you can compare the effects of market volatilities on Harmony Gold and AECI 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 AECI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and AECI.
Diversification Opportunities for Harmony Gold and AECI
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Harmony and AECI is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and AECI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECI 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 AECI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECI has no effect on the direction of Harmony Gold i.e., Harmony Gold and AECI go up and down completely randomly.
Pair Corralation between Harmony Gold and AECI
Assuming the 90 days trading horizon Harmony Gold Mining is expected to generate 1.97 times more return on investment than AECI. However, Harmony Gold is 1.97 times more volatile than AECI. It trades about 0.08 of its potential returns per unit of risk. AECI is currently generating about 0.02 per unit of risk. If you would invest 615,400 in Harmony Gold Mining on August 28, 2024 and sell it today you would earn a total of 1,058,700 from holding Harmony Gold Mining or generate 172.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. AECI
Performance |
| Timeline |
| Harmony Gold Mining |
| AECI |
Harmony Gold and AECI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and AECI
The main advantage of trading using opposite Harmony Gold and AECI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, AECI 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 AECI will offset losses from the drop in AECI's long position.| Harmony Gold vs. eMedia Holdings Limited | Harmony Gold vs. Frontier Transport Holdings | Harmony Gold vs. Standard Bank Group | Harmony Gold vs. CA Sales Holdings |
| AECI vs. Harmony Gold Mining | AECI vs. Zeder Investments | AECI vs. RCL Foods | AECI vs. Safari Investments RSA |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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