Correlation Between Harmony Gold and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Standard Bank 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 Standard Bank 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 Standard Bank Group, you can compare the effects of market volatilities on Harmony Gold and Standard Bank 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 Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Standard Bank.
Diversification Opportunities for Harmony Gold and Standard Bank
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Harmony and Standard is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank Group 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 Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of Harmony Gold i.e., Harmony Gold and Standard Bank go up and down completely randomly.
Pair Corralation between Harmony Gold and Standard Bank
Assuming the 90 days trading horizon Harmony Gold Mining is expected to under-perform the Standard Bank. In addition to that, Harmony Gold is 1.71 times more volatile than Standard Bank Group. It trades about -0.2 of its total potential returns per unit of risk. Standard Bank Group is currently generating about 0.06 per unit of volatility. If you would invest 930,000 in Standard Bank Group on August 24, 2024 and sell it today you would earn a total of 17,200 from holding Standard Bank Group or generate 1.85% 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. Standard Bank Group
Performance |
| Timeline |
| Harmony Gold Mining |
| Standard Bank Group |
Harmony Gold and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Standard Bank
The main advantage of trading using opposite Harmony Gold and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Standard Bank 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 Standard Bank will offset losses from the drop in Standard Bank's long position.| Harmony Gold vs. Gold Fields | Harmony Gold vs. Sibanye Stillwater | Harmony Gold vs. Pan African Resources |
| Standard Bank vs. Advtech | Standard Bank vs. Astral Foods | Standard Bank vs. Reinet Investments SCA | Standard Bank vs. Astoria Investments |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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