Correlation Between Harmony Gold and Ternium SA
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Ternium 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 Ternium 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 Ternium SA DRC, you can compare the effects of market volatilities on Harmony Gold and Ternium 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 Ternium SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Ternium SA.
Diversification Opportunities for Harmony Gold and Ternium SA
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Harmony and Ternium is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Ternium SA DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ternium SA DRC 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 Ternium SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ternium SA DRC has no effect on the direction of Harmony Gold i.e., Harmony Gold and Ternium SA go up and down completely randomly.
Pair Corralation between Harmony Gold and Ternium SA
Assuming the 90 days trading horizon Harmony Gold Mining is expected to generate 2.05 times more return on investment than Ternium SA. However, Harmony Gold is 2.05 times more volatile than Ternium SA DRC. It trades about 0.1 of its potential returns per unit of risk. Ternium SA DRC is currently generating about -0.04 per unit of risk. If you would invest 609,900 in Harmony Gold Mining on August 27, 2024 and sell it today you would earn a total of 460,100 from holding Harmony Gold Mining or generate 75.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Ternium SA DRC
Performance |
| Timeline |
| Harmony Gold Mining |
| Ternium SA DRC |
Harmony Gold and Ternium SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Ternium SA
The main advantage of trading using opposite Harmony Gold and Ternium SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Ternium 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 Ternium SA will offset losses from the drop in Ternium SA's long position.The idea behind Harmony Gold Mining and Ternium SA DRC 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.| Ternium SA vs. United States Steel | Ternium SA vs. Pfizer Inc | Ternium SA vs. Distribuidora de Gas | Ternium SA vs. IRSA Propiedades Comerciales |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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