Correlation Between Harmony Gold and Empresa Distribuidora
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Empresa Distribuidora 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 Empresa Distribuidora 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 Empresa Distribuidora y, you can compare the effects of market volatilities on Harmony Gold and Empresa Distribuidora 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 Empresa Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Empresa Distribuidora.
Diversification Opportunities for Harmony Gold and Empresa Distribuidora
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Harmony and Empresa is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Empresa Distribuidora y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Distribuidora 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 Empresa Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Distribuidora has no effect on the direction of Harmony Gold i.e., Harmony Gold and Empresa Distribuidora go up and down completely randomly.
Pair Corralation between Harmony Gold and Empresa Distribuidora
Assuming the 90 days trading horizon Harmony Gold Mining is expected to under-perform the Empresa Distribuidora. In addition to that, Harmony Gold is 1.31 times more volatile than Empresa Distribuidora y. It trades about -0.07 of its total potential returns per unit of risk. Empresa Distribuidora y is currently generating about 0.31 per unit of volatility. If you would invest 126,500 in Empresa Distribuidora y on September 2, 2024 and sell it today you would earn a total of 89,500 from holding Empresa Distribuidora y or generate 70.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Empresa Distribuidora y
Performance |
| Timeline |
| Harmony Gold Mining |
| Empresa Distribuidora |
Harmony Gold and Empresa Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Empresa Distribuidora
The main advantage of trading using opposite Harmony Gold and Empresa Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Empresa Distribuidora 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 Empresa Distribuidora will offset losses from the drop in Empresa Distribuidora's long position.The idea behind Harmony Gold Mining and Empresa Distribuidora y pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Empresa Distribuidora vs. Telecom Argentina | Empresa Distribuidora vs. Transportadora de Gas | Empresa Distribuidora vs. Harmony Gold Mining | Empresa Distribuidora 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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