Correlation Between Harmony Gold and United Airlines
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and United Airlines 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 United Airlines 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 United Airlines Holdings, you can compare the effects of market volatilities on Harmony Gold and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and United Airlines.
Diversification Opportunities for Harmony Gold and United Airlines
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Harmony and United is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Harmony Gold i.e., Harmony Gold and United Airlines go up and down completely randomly.
Pair Corralation between Harmony Gold and United Airlines
Assuming the 90 days horizon Harmony Gold is expected to generate 1.42 times less return on investment than United Airlines. In addition to that, Harmony Gold is 1.19 times more volatile than United Airlines Holdings. It trades about 0.09 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.15 per unit of volatility. If you would invest 4,549 in United Airlines Holdings on August 27, 2024 and sell it today you would earn a total of 4,975 from holding United Airlines Holdings or generate 109.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 84.57% |
| Values | Daily Returns |
Harmony Gold Mining vs. United Airlines Holdings
Performance |
| Timeline |
| Harmony Gold Mining |
| United Airlines Holdings |
Harmony Gold and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and United Airlines
The main advantage of trading using opposite Harmony Gold and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| Harmony Gold vs. Zoom Video Communications | Harmony Gold vs. Summit Environmental | Harmony Gold vs. Sanyo Special Steel | Harmony Gold vs. United States Steel |
| United Airlines vs. American Airlines Group | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways Corp | United Airlines vs. Spirit Airlines |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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