Correlation Between Harmony Gold and Compania
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Compania 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 Compania 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 Compania de Transporte, you can compare the effects of market volatilities on Harmony Gold and Compania 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 Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Compania.
Diversification Opportunities for Harmony Gold and Compania
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Harmony and Compania is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Compania de Transporte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Transporte 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 Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Transporte has no effect on the direction of Harmony Gold i.e., Harmony Gold and Compania go up and down completely randomly.
Pair Corralation between Harmony Gold and Compania
Assuming the 90 days trading horizon Harmony Gold Mining is expected to generate 0.59 times more return on investment than Compania. However, Harmony Gold Mining is 1.68 times less risky than Compania. It trades about 0.51 of its potential returns per unit of risk. Compania de Transporte is currently generating about -0.25 per unit of risk. If you would invest 961,000 in Harmony Gold Mining on October 20, 2024 and sell it today you would earn a total of 191,500 from holding Harmony Gold Mining or generate 19.93% 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. Compania de Transporte
Performance |
| Timeline |
| Harmony Gold Mining |
| Compania de Transporte |
Harmony Gold and Compania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Compania
The main advantage of trading using opposite Harmony Gold and Compania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Compania 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 Compania will offset losses from the drop in Compania's long position.| Harmony Gold vs. United States Steel | Harmony Gold vs. Compania de Transporte | Harmony Gold vs. Agrometal SAI |
| Compania vs. Pampa Energia SA | Compania vs. American Express Co | Compania vs. Transportadora de Gas | Compania vs. Central Puerto SA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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