Correlation Between Harmony Gold and Metrogas
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Metrogas 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 Metrogas 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 Metrogas SA, you can compare the effects of market volatilities on Harmony Gold and Metrogas 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 Metrogas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Metrogas.
Diversification Opportunities for Harmony Gold and Metrogas
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Harmony and Metrogas is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Metrogas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrogas 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 Metrogas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrogas SA has no effect on the direction of Harmony Gold i.e., Harmony Gold and Metrogas go up and down completely randomly.
Pair Corralation between Harmony Gold and Metrogas
Assuming the 90 days trading horizon Harmony Gold Mining is expected to under-perform the Metrogas. In addition to that, Harmony Gold is 1.43 times more volatile than Metrogas SA. It trades about -0.36 of its total potential returns per unit of risk. Metrogas SA is currently generating about 0.95 per unit of volatility. If you would invest 138,500 in Metrogas SA on August 31, 2024 and sell it today you would earn a total of 83,000 from holding Metrogas SA or generate 59.93% 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. Metrogas SA
Performance |
| Timeline |
| Harmony Gold Mining |
| Metrogas SA |
Harmony Gold and Metrogas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Metrogas
The main advantage of trading using opposite Harmony Gold and Metrogas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Metrogas 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 Metrogas will offset losses from the drop in Metrogas' long position.| Harmony Gold vs. Transportadora de Gas | Harmony Gold vs. Compania de Transporte | Harmony Gold vs. United States Steel |
| Metrogas vs. Pfizer Inc | Metrogas vs. Instituto Rosenbusch SA | Metrogas vs. Sociedad Comercial del | Metrogas vs. Ledesma SAAI |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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