Correlation Between RCL Foods and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both RCL Foods 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 RCL Foods and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCL Foods and Harmony Gold Mining, you can compare the effects of market volatilities on RCL Foods 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 RCL Foods with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCL Foods and Harmony Gold.
Diversification Opportunities for RCL Foods and Harmony Gold
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between RCL and Harmony is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding RCL Foods 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 RCL Foods 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 RCL Foods 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 RCL Foods i.e., RCL Foods and Harmony Gold go up and down completely randomly.
Pair Corralation between RCL Foods and Harmony Gold
Assuming the 90 days trading horizon RCL Foods is expected to under-perform the Harmony Gold. But the stock apears to be less risky and, when comparing its historical volatility, RCL Foods is 1.03 times less risky than Harmony Gold. The stock trades about -0.02 of its potential returns per unit of risk. The Harmony Gold Mining is currently generating about 0.71 of returns per unit of risk over similar time horizon. If you would invest 1,603,500 in Harmony Gold Mining on November 3, 2024 and sell it today you would earn a total of 540,400 from holding Harmony Gold Mining or generate 33.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCL Foods vs. Harmony Gold Mining
Performance |
| Timeline |
| RCL Foods |
| Harmony Gold Mining |
RCL Foods and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCL Foods and Harmony Gold
The main advantage of trading using opposite RCL Foods and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCL Foods 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.| RCL Foods vs. Bytes Technology | RCL Foods vs. Deneb Investments | RCL Foods vs. Datatec | RCL Foods vs. Reinet Investments SCA |
| Harmony Gold vs. RCL Foods | Harmony Gold vs. Boxer Retail | Harmony Gold vs. Lesaka Technologies | Harmony Gold vs. Copper 360 |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |