Correlation Between Harmony Gold and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics, you can compare the effects of market volatilities on Harmony Gold and Arrow Electronics 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 Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Arrow Electronics.
Diversification Opportunities for Harmony Gold and Arrow Electronics
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harmony and Arrow is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Harmony Gold i.e., Harmony Gold and Arrow Electronics go up and down completely randomly.
Pair Corralation between Harmony Gold and Arrow Electronics
Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the Arrow Electronics. In addition to that, Harmony Gold is 1.45 times more volatile than Arrow Electronics. It trades about -0.22 of its total potential returns per unit of risk. Arrow Electronics is currently generating about -0.16 per unit of volatility. If you would invest 13,382 in Arrow Electronics on August 27, 2024 and sell it today you would lose (1,456) from holding Arrow Electronics or give up 10.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Arrow Electronics
Performance |
| Timeline |
| Harmony Gold Mining |
| Arrow Electronics |
Harmony Gold and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Arrow Electronics
The main advantage of trading using opposite Harmony Gold and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| Harmony Gold vs. Neogen | Harmony Gold vs. Merit Medical Systems | Harmony Gold vs. Omni Health | Harmony Gold vs. Hurco Companies |
| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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