Correlation Between Molinos Rio and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Molinos Rio 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 Molinos Rio and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molinos Rio de and Harmony Gold Mining, you can compare the effects of market volatilities on Molinos Rio 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 Molinos Rio with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molinos Rio and Harmony Gold.
Diversification Opportunities for Molinos Rio and Harmony Gold
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Molinos and Harmony is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Molinos Rio de 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 Molinos Rio 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 Molinos Rio de 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 Molinos Rio i.e., Molinos Rio and Harmony Gold go up and down completely randomly.
Pair Corralation between Molinos Rio and Harmony Gold
Assuming the 90 days trading horizon Molinos Rio de is expected to generate 1.75 times more return on investment than Harmony Gold. However, Molinos Rio is 1.75 times more volatile than Harmony Gold Mining. It trades about 0.58 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.03 per unit of risk. If you would invest 363,163 in Molinos Rio de on October 12, 2024 and sell it today you would earn a total of 136,837 from holding Molinos Rio de or generate 37.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Molinos Rio de vs. Harmony Gold Mining
Performance |
| Timeline |
| Molinos Rio de |
| Harmony Gold Mining |
Molinos Rio and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molinos Rio and Harmony Gold
The main advantage of trading using opposite Molinos Rio and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molinos Rio 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.| Molinos Rio vs. Harmony Gold Mining | Molinos Rio vs. Compania de Transporte | Molinos Rio vs. United States Steel | Molinos Rio vs. Transportadora de Gas |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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