Correlation Between Harmony Gold and Teradyne
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Teradyne 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 Teradyne 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 Teradyne, you can compare the effects of market volatilities on Harmony Gold and Teradyne 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 Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Teradyne.
Diversification Opportunities for Harmony Gold and Teradyne
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Harmony and Teradyne is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne 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 Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Harmony Gold i.e., Harmony Gold and Teradyne go up and down completely randomly.
Pair Corralation between Harmony Gold and Teradyne
Assuming the 90 days horizon Harmony Gold is expected to generate 5.5 times less return on investment than Teradyne. In addition to that, Harmony Gold is 2.24 times more volatile than Teradyne. It trades about 0.02 of its total potential returns per unit of risk. Teradyne is currently generating about 0.25 per unit of volatility. If you would invest 12,519 in Teradyne on October 20, 2024 and sell it today you would earn a total of 1,321 from holding Teradyne or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Teradyne
Performance |
| Timeline |
| Harmony Gold Mining |
| Teradyne |
Harmony Gold and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Teradyne
The main advantage of trading using opposite Harmony Gold and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Teradyne 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 Teradyne will offset losses from the drop in Teradyne's long position.| Harmony Gold vs. Marimaca Copper Corp | Harmony Gold vs. Sea | Harmony Gold vs. Cardinal Health | Harmony Gold vs. Zijin Mining Group |
| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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