Correlation Between Harmony Gold and Cheesecake Factory
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Cheesecake Factory 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 Cheesecake Factory 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 The Cheesecake Factory, you can compare the effects of market volatilities on Harmony Gold and Cheesecake Factory 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 Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Cheesecake Factory.
Diversification Opportunities for Harmony Gold and Cheesecake Factory
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Harmony and Cheesecake is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and The Cheesecake Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Cheesecake Factory 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 Cheesecake Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Cheesecake Factory has no effect on the direction of Harmony Gold i.e., Harmony Gold and Cheesecake Factory go up and down completely randomly.
Pair Corralation between Harmony Gold and Cheesecake Factory
Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the Cheesecake Factory. In addition to that, Harmony Gold is 2.05 times more volatile than The Cheesecake Factory. It trades about -0.22 of its total potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.22 per unit of volatility. If you would invest 4,596 in The Cheesecake Factory on September 1, 2024 and sell it today you would earn a total of 468.00 from holding The Cheesecake Factory or generate 10.18% 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. The Cheesecake Factory
Performance |
| Timeline |
| Harmony Gold Mining |
| The Cheesecake Factory |
Harmony Gold and Cheesecake Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Cheesecake Factory
The main advantage of trading using opposite Harmony Gold and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Cheesecake Factory 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 Cheesecake Factory will offset losses from the drop in Cheesecake Factory's long position.| Harmony Gold vs. Aurion Resources | Harmony Gold vs. Rio2 Limited | Harmony Gold vs. Palamina Corp | Harmony Gold vs. BTU Metals Corp |
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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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