Correlation Between HomeChoice Investments and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both HomeChoice Investments and Harmony Gold 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 HomeChoice Investments and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeChoice Investments and Harmony Gold Mining, you can compare the effects of market volatilities on HomeChoice Investments and Harmony Gold 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 HomeChoice Investments with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeChoice Investments and Harmony Gold.
Diversification Opportunities for HomeChoice Investments and Harmony Gold
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HomeChoice and Harmony is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding HomeChoice Investments and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining and HomeChoice Investments 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 HomeChoice Investments are associated (or correlated) with Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of HomeChoice Investments i.e., HomeChoice Investments and Harmony Gold go up and down completely randomly.
Pair Corralation between HomeChoice Investments and Harmony Gold
Assuming the 90 days trading horizon HomeChoice Investments is expected to generate 1.18 times more return on investment than Harmony Gold. However, HomeChoice Investments is 1.18 times more volatile than Harmony Gold Mining. It trades about -0.09 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.28 per unit of risk. If you would invest 380,000 in HomeChoice Investments on August 24, 2024 and sell it today you would lose (25,000) from holding HomeChoice Investments or give up 6.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HomeChoice Investments vs. Harmony Gold Mining
Performance |
| Timeline |
| HomeChoice Investments |
| Harmony Gold Mining |
HomeChoice Investments and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeChoice Investments and Harmony Gold
The main advantage of trading using opposite HomeChoice Investments and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeChoice Investments position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| HomeChoice Investments vs. Safari Investments RSA | HomeChoice Investments vs. Standard Bank Group | HomeChoice Investments vs. Zeder Investments | HomeChoice Investments vs. City Lodge Hotels |
| Harmony Gold vs. Gold Fields | Harmony Gold vs. Sibanye Stillwater | Harmony Gold vs. Pan African Resources |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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