Correlation Between Harmony Gold and Fomento Economico
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Fomento Economico 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 Fomento Economico 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 Fomento Economico Mexicano, you can compare the effects of market volatilities on Harmony Gold and Fomento Economico 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 Fomento Economico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Fomento Economico.
Diversification Opportunities for Harmony Gold and Fomento Economico
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Harmony and Fomento is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico 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 Fomento Economico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Economico has no effect on the direction of Harmony Gold i.e., Harmony Gold and Fomento Economico go up and down completely randomly.
Pair Corralation between Harmony Gold and Fomento Economico
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 2.19 times more return on investment than Fomento Economico. However, Harmony Gold is 2.19 times more volatile than Fomento Economico Mexicano. It trades about 0.08 of its potential returns per unit of risk. Fomento Economico Mexicano is currently generating about -0.07 per unit of risk. If you would invest 636.00 in Harmony Gold Mining on September 2, 2024 and sell it today you would earn a total of 314.00 from holding Harmony Gold Mining or generate 49.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 68.55% |
| Values | Daily Returns |
Harmony Gold Mining vs. Fomento Economico Mexicano
Performance |
| Timeline |
| Harmony Gold Mining |
| Fomento Economico |
Harmony Gold and Fomento Economico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Fomento Economico
The main advantage of trading using opposite Harmony Gold and Fomento Economico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Fomento Economico 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 Fomento Economico will offset losses from the drop in Fomento Economico's long position.| Harmony Gold vs. Aurion Resources | Harmony Gold vs. Rio2 Limited | Harmony Gold vs. Palamina Corp | Harmony Gold vs. Grande Portage Resources |
| Fomento Economico vs. Ambev SA ADR | Fomento Economico vs. Boston Beer | Fomento Economico vs. Carlsberg AS | Fomento Economico vs. Molson Coors Brewing |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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