Correlation Between Harmony Gold and Tencent Music
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Tencent Music 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 Tencent Music 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 Tencent Music Entertainment, you can compare the effects of market volatilities on Harmony Gold and Tencent Music 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 Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Tencent Music.
Diversification Opportunities for Harmony Gold and Tencent Music
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Harmony and Tencent is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Tencent Music Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Music Entert 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 Tencent Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Music Entert has no effect on the direction of Harmony Gold i.e., Harmony Gold and Tencent Music go up and down completely randomly.
Pair Corralation between Harmony Gold and Tencent Music
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 1.88 times more return on investment than Tencent Music. However, Harmony Gold is 1.88 times more volatile than Tencent Music Entertainment. It trades about 0.1 of its potential returns per unit of risk. Tencent Music Entertainment is currently generating about 0.04 per unit of risk. If you would invest 202.00 in Harmony Gold Mining on August 27, 2024 and sell it today you would earn a total of 748.00 from holding Harmony Gold Mining or generate 370.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 65.52% |
| Values | Daily Returns |
Harmony Gold Mining vs. Tencent Music Entertainment
Performance |
| Timeline |
| Harmony Gold Mining |
| Tencent Music Entert |
Harmony Gold and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Tencent Music
The main advantage of trading using opposite Harmony Gold and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Tencent Music 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 Tencent Music will offset losses from the drop in Tencent Music's long position.| Harmony Gold vs. Neogen | Harmony Gold vs. Merit Medical Systems | Harmony Gold vs. Omni Health | Harmony Gold vs. Hurco Companies |
| Tencent Music vs. Trivago NV | Tencent Music vs. Cheetah Mobile | Tencent Music vs. Comscore | Tencent Music vs. Arena Group Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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