Correlation Between Harmony Gold and Central Plains
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Central Plains 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 Central Plains 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 Central Plains Bancshares,, you can compare the effects of market volatilities on Harmony Gold and Central Plains 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 Central Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Central Plains.
Diversification Opportunities for Harmony Gold and Central Plains
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Harmony and Central is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Central Plains Bancshares, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Plains Bancs 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 Central Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Plains Bancs has no effect on the direction of Harmony Gold i.e., Harmony Gold and Central Plains go up and down completely randomly.
Pair Corralation between Harmony Gold and Central Plains
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 3.37 times more return on investment than Central Plains. However, Harmony Gold is 3.37 times more volatile than Central Plains Bancshares,. It trades about 0.02 of its potential returns per unit of risk. Central Plains Bancshares, is currently generating about 0.01 per unit of risk. If you would invest 950.00 in Harmony Gold Mining on October 22, 2024 and sell it today you would lose (1.00) from holding Harmony Gold Mining or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Harmony Gold Mining vs. Central Plains Bancshares,
Performance |
| Timeline |
| Harmony Gold Mining |
| Central Plains Bancs |
Harmony Gold and Central Plains Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Central Plains
The main advantage of trading using opposite Harmony Gold and Central Plains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Central Plains 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 Central Plains will offset losses from the drop in Central Plains' long position.| Harmony Gold vs. American Airlines Group | Harmony Gold vs. BTU Metals Corp | Harmony Gold vs. Air Transport Services | Harmony Gold vs. Delta Air Lines |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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