Correlation Between Patterson UTI and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Patterson UTI 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 Patterson UTI and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Patterson UTI Energy and Harmony Gold Mining, you can compare the effects of market volatilities on Patterson UTI 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 Patterson UTI with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Harmony Gold.
Diversification Opportunities for Patterson UTI and Harmony Gold
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Patterson and Harmony is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy 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 Patterson UTI 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 Patterson UTI Energy 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 Patterson UTI i.e., Patterson UTI and Harmony Gold go up and down completely randomly.
Pair Corralation between Patterson UTI and Harmony Gold
Given the investment horizon of 90 days Patterson UTI Energy is expected to generate 0.75 times more return on investment than Harmony Gold. However, Patterson UTI Energy is 1.33 times less risky than Harmony Gold. It trades about 0.1 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.05 per unit of risk. If you would invest 765.00 in Patterson UTI Energy on August 30, 2024 and sell it today you would earn a total of 81.00 from holding Patterson UTI Energy or generate 10.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patterson UTI Energy vs. Harmony Gold Mining
Performance |
| Timeline |
| Patterson UTI Energy |
| Harmony Gold Mining |
Patterson UTI and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and Harmony Gold
The main advantage of trading using opposite Patterson UTI and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI 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.| Patterson UTI vs. Nabors Industries | Patterson UTI vs. Precision Drilling | Patterson UTI vs. Noble plc | Patterson UTI vs. Helmerich and Payne |
| Harmony Gold vs. AngloGold Ashanti plc | Harmony Gold vs. Eldorado Gold Corp | Harmony Gold vs. Kinross Gold | Harmony Gold vs. Pan American Silver |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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