Correlation Between Harmony Gold and Capex SA
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Capex SA 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 Capex SA 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 Capex SA, you can compare the effects of market volatilities on Harmony Gold and Capex SA 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 Capex SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Capex SA.
Diversification Opportunities for Harmony Gold and Capex SA
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harmony and Capex is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Capex SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capex SA 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 Capex SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capex SA has no effect on the direction of Harmony Gold i.e., Harmony Gold and Capex SA go up and down completely randomly.
Pair Corralation between Harmony Gold and Capex SA
Assuming the 90 days trading horizon Harmony Gold Mining is expected to generate 1.03 times more return on investment than Capex SA. However, Harmony Gold is 1.03 times more volatile than Capex SA. It trades about 0.14 of its potential returns per unit of risk. Capex SA is currently generating about 0.1 per unit of risk. If you would invest 220,450 in Harmony Gold Mining on August 26, 2024 and sell it today you would earn a total of 849,550 from holding Harmony Gold Mining or generate 385.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Capex SA
Performance |
| Timeline |
| Harmony Gold Mining |
| Capex SA |
Harmony Gold and Capex SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Capex SA
The main advantage of trading using opposite Harmony Gold and Capex SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Capex SA 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 Capex SA will offset losses from the drop in Capex SA's long position.| Harmony Gold vs. Telecom Argentina | Harmony Gold vs. Transportadora de Gas | Harmony Gold vs. Agrometal SAI | Harmony Gold vs. United States Steel |
| Capex SA vs. Transportadora de Gas | Capex SA vs. Harmony Gold Mining | Capex SA vs. Agrometal SAI | Capex SA vs. Compania de Transporte |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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