Correlation Between Harmony Gold and Balchem
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Balchem 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 Balchem 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 Balchem, you can compare the effects of market volatilities on Harmony Gold and Balchem 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 Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Balchem.
Diversification Opportunities for Harmony Gold and Balchem
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Harmony and Balchem is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem 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 Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of Harmony Gold i.e., Harmony Gold and Balchem go up and down completely randomly.
Pair Corralation between Harmony Gold and Balchem
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 2.98 times more return on investment than Balchem. However, Harmony Gold is 2.98 times more volatile than Balchem. It trades about 0.09 of its potential returns per unit of risk. Balchem is currently generating about 0.07 per unit of risk. If you would invest 475.00 in Harmony Gold Mining on August 31, 2024 and sell it today you would earn a total of 475.00 from holding Harmony Gold Mining or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 56.6% |
| Values | Daily Returns |
Harmony Gold Mining vs. Balchem
Performance |
| Timeline |
| Harmony Gold Mining |
| Balchem |
Harmony Gold and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Balchem
The main advantage of trading using opposite Harmony Gold and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Balchem 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 Balchem will offset losses from the drop in Balchem's long position.| Harmony Gold vs. Aurion Resources | Harmony Gold vs. Rio2 Limited | Harmony Gold vs. Palamina Corp | Harmony Gold vs. BTU Metals Corp |
| Balchem vs. Eastman Chemical | Balchem vs. Air Products and | Balchem vs. Linde plc Ordinary | Balchem vs. Ecolab Inc |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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