Correlation Between Loma Negra and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Loma Negra 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 Loma Negra and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loma Negra Compania and Harmony Gold Mining, you can compare the effects of market volatilities on Loma Negra 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 Loma Negra with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loma Negra and Harmony Gold.
Diversification Opportunities for Loma Negra and Harmony Gold
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Loma and Harmony is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Loma Negra Compania 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 Loma Negra 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 Loma Negra Compania 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 Loma Negra i.e., Loma Negra and Harmony Gold go up and down completely randomly.
Pair Corralation between Loma Negra and Harmony Gold
Assuming the 90 days trading horizon Loma Negra Compania is expected to under-perform the Harmony Gold. In addition to that, Loma Negra is 1.73 times more volatile than Harmony Gold Mining. It trades about -0.1 of its total potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.51 per unit of volatility. 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loma Negra Compania vs. Harmony Gold Mining
Performance |
| Timeline |
| Loma Negra Compania |
| Harmony Gold Mining |
Loma Negra and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loma Negra and Harmony Gold
The main advantage of trading using opposite Loma Negra and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loma Negra 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.| Loma Negra vs. Harmony Gold Mining | Loma Negra vs. Transportadora de Gas | Loma Negra vs. Compania de Transporte | Loma Negra vs. Telecom Argentina |
| Harmony Gold vs. United States Steel | Harmony Gold vs. Compania de Transporte | Harmony Gold vs. Agrometal SAI |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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