Correlation Between Insurance Australia and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Insurance Australia 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 Insurance Australia and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insurance Australia Group and Harmony Gold Mining, you can compare the effects of market volatilities on Insurance Australia 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 Insurance Australia with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Harmony Gold.
Diversification Opportunities for Insurance Australia and Harmony Gold
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insurance and Harmony is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group 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 Insurance Australia 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 Insurance Australia Group 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 Insurance Australia i.e., Insurance Australia and Harmony Gold go up and down completely randomly.
Pair Corralation between Insurance Australia and Harmony Gold
Assuming the 90 days horizon Insurance Australia Group is expected to generate 0.81 times more return on investment than Harmony Gold. However, Insurance Australia Group is 1.23 times less risky than Harmony Gold. It trades about -0.02 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 500.00 in Insurance Australia Group on September 25, 2024 and sell it today you would lose (4.00) from holding Insurance Australia Group or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. Harmony Gold Mining
Performance |
| Timeline |
| Insurance Australia |
| Harmony Gold Mining |
Insurance Australia and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Harmony Gold
The main advantage of trading using opposite Insurance Australia and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia 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.| Insurance Australia vs. CN MODERN DAIRY | Insurance Australia vs. Ross Stores | Insurance Australia vs. Caseys General Stores | Insurance Australia vs. Tyson Foods |
| Harmony Gold vs. ZIJIN MINH UNSPADR20 | Harmony Gold vs. Newmont | Harmony Gold vs. Barrick Gold | Harmony Gold vs. Franco Nevada |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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