Correlation Between TEXAS ROADHOUSE and Harmony Gold

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Can any of the company-specific risk be diversified away by investing in both TEXAS ROADHOUSE 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 TEXAS ROADHOUSE and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TEXAS ROADHOUSE and Harmony Gold Mining, you can compare the effects of market volatilities on TEXAS ROADHOUSE 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 TEXAS ROADHOUSE with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of TEXAS ROADHOUSE and Harmony Gold.

Diversification Opportunities for TEXAS ROADHOUSE and Harmony Gold

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between TEXAS and Harmony is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding TEXAS ROADHOUSE 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 TEXAS ROADHOUSE 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 TEXAS ROADHOUSE 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 TEXAS ROADHOUSE i.e., TEXAS ROADHOUSE and Harmony Gold go up and down completely randomly.

Pair Corralation between TEXAS ROADHOUSE and Harmony Gold

Assuming the 90 days trading horizon TEXAS ROADHOUSE is expected to generate 0.59 times more return on investment than Harmony Gold. However, TEXAS ROADHOUSE is 1.7 times less risky than Harmony Gold. It trades about 0.0 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  18,344  in TEXAS ROADHOUSE on September 12, 2024 and sell it today you would lose (44.00) from holding TEXAS ROADHOUSE or give up 0.24% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

TEXAS ROADHOUSE  vs.  Harmony Gold Mining

 Performance 
       Timeline  
TEXAS ROADHOUSE 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in TEXAS ROADHOUSE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, TEXAS ROADHOUSE exhibited solid returns over the last few months and may actually be approaching a breakup point.
Harmony Gold Mining 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Harmony Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TEXAS ROADHOUSE and Harmony Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TEXAS ROADHOUSE and Harmony Gold

The main advantage of trading using opposite TEXAS ROADHOUSE and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TEXAS ROADHOUSE 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.
The idea behind TEXAS ROADHOUSE and Harmony Gold Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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