Correlation Between LPKF Laser and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both LPKF Laser 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 LPKF Laser and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPKF Laser Electronics and Harmony Gold Mining, you can compare the effects of market volatilities on LPKF Laser 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 LPKF Laser with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Harmony Gold.
Diversification Opportunities for LPKF Laser and Harmony Gold
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LPKF and Harmony is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics 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 LPKF Laser 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 LPKF Laser Electronics 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 LPKF Laser i.e., LPKF Laser and Harmony Gold go up and down completely randomly.
Pair Corralation between LPKF Laser and Harmony Gold
Assuming the 90 days horizon LPKF Laser is expected to generate 1.37 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, LPKF Laser Electronics is 1.85 times less risky than Harmony Gold. It trades about 0.03 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 820.00 in Harmony Gold Mining on August 31, 2024 and sell it today you would earn a total of 25.00 from holding Harmony Gold Mining or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Harmony Gold Mining
Performance |
| Timeline |
| LPKF Laser Electronics |
| Harmony Gold Mining |
LPKF Laser and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Harmony Gold
The main advantage of trading using opposite LPKF Laser and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser 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.| LPKF Laser vs. ABB | LPKF Laser vs. Emerson Electric Co | LPKF Laser vs. Superior Plus Corp | LPKF Laser vs. NMI Holdings |
| Harmony Gold vs. ZIJIN MINH UNSPADR20 | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. NMI Holdings | Harmony Gold vs. Origin Agritech |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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