Correlation Between Harmony Gold and Stepan
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Stepan 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 Stepan 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 Stepan Company, you can compare the effects of market volatilities on Harmony Gold and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Stepan.
Diversification Opportunities for Harmony Gold and Stepan
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Harmony and Stepan is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Harmony Gold i.e., Harmony Gold and Stepan go up and down completely randomly.
Pair Corralation between Harmony Gold and Stepan
Considering the 90-day investment horizon Harmony Gold Mining is expected to under-perform the Stepan. In addition to that, Harmony Gold is 1.41 times more volatile than Stepan Company. It trades about -0.21 of its total potential returns per unit of risk. Stepan Company is currently generating about 0.09 per unit of volatility. If you would invest 7,273 in Stepan Company on August 24, 2024 and sell it today you would earn a total of 327.00 from holding Stepan Company or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Stepan Company
Performance |
| Timeline |
| Harmony Gold Mining |
| Stepan Company |
Harmony Gold and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Stepan
The main advantage of trading using opposite Harmony Gold and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan'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 |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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