Correlation Between Harmony Gold and Lundin Gold
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Lundin Gold 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 Lundin Gold 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 Lundin Gold, you can compare the effects of market volatilities on Harmony Gold and Lundin Gold 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 Lundin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Lundin Gold.
Diversification Opportunities for Harmony Gold and Lundin Gold
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harmony and Lundin is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Lundin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Gold 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 Lundin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Gold has no effect on the direction of Harmony Gold i.e., Harmony Gold and Lundin Gold go up and down completely randomly.
Pair Corralation between Harmony Gold and Lundin Gold
Considering the 90-day investment horizon Harmony Gold Mining is expected to generate 1.38 times more return on investment than Lundin Gold. However, Harmony Gold is 1.38 times more volatile than Lundin Gold. It trades about 0.07 of its potential returns per unit of risk. Lundin Gold is currently generating about 0.09 per unit of risk. If you would invest 343.00 in Harmony Gold Mining on September 4, 2024 and sell it today you would earn a total of 549.00 from holding Harmony Gold Mining or generate 160.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Lundin Gold
Performance |
| Timeline |
| Harmony Gold Mining |
| Lundin Gold |
Harmony Gold and Lundin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Lundin Gold
The main advantage of trading using opposite Harmony Gold and Lundin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Lundin Gold 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 Lundin Gold will offset losses from the drop in Lundin Gold's long position.| Harmony Gold vs. AngloGold Ashanti plc | Harmony Gold vs. Eldorado Gold Corp | Harmony Gold vs. Kinross Gold | Harmony Gold vs. Pan American Silver |
| Lundin Gold vs. Sirios Resources | Lundin Gold vs. Q2 Metals Corp | Lundin Gold vs. Tectonic Metals | Lundin Gold vs. Angus Gold |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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