Correlation Between KENNAMETAL INC and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC and Harmony 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 KENNAMETAL INC and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and Harmony Gold Mining, you can compare the effects of market volatilities on KENNAMETAL INC and Harmony 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 KENNAMETAL INC with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and Harmony Gold.
Diversification Opportunities for KENNAMETAL INC and Harmony Gold
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KENNAMETAL and Harmony is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining and KENNAMETAL INC 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 KENNAMETAL INC are associated (or correlated) with Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of KENNAMETAL INC i.e., KENNAMETAL INC and Harmony Gold go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and Harmony Gold
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 1.17 times more return on investment than Harmony Gold. However, KENNAMETAL INC is 1.17 times more volatile than Harmony Gold Mining. It trades about 0.23 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.19 per unit of risk. If you would invest 2,283 in KENNAMETAL INC on August 29, 2024 and sell it today you would earn a total of 497.00 from holding KENNAMETAL INC or generate 21.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
KENNAMETAL INC vs. Harmony Gold Mining
Performance |
| Timeline |
| KENNAMETAL INC |
| Harmony Gold Mining |
KENNAMETAL INC and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and Harmony Gold
The main advantage of trading using opposite KENNAMETAL INC and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC position performs unexpectedly, Harmony 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| KENNAMETAL INC vs. China Datang | KENNAMETAL INC vs. QUEEN S ROAD | KENNAMETAL INC vs. GOLD ROAD RES | KENNAMETAL INC vs. TERADATA |
| Harmony Gold vs. Franco Nevada | Harmony Gold vs. Wheaton Precious Metals | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. NMI Holdings |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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