Correlation Between Boston Beer and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Boston Beer 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 Boston Beer and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Harmony Gold Mining, you can compare the effects of market volatilities on Boston Beer 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 Boston Beer with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Harmony Gold.
Diversification Opportunities for Boston Beer and Harmony Gold
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Boston and Harmony is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer 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 Boston Beer 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 Boston Beer 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 Boston Beer i.e., Boston Beer and Harmony Gold go up and down completely randomly.
Pair Corralation between Boston Beer and Harmony Gold
Considering the 90-day investment horizon Boston Beer is expected to generate 44.48 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Boston Beer is 1.62 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 0.09 of returns per unit of risk over similar time horizon. If you would invest 375.00 in Harmony Gold Mining on September 26, 2024 and sell it today you would earn a total of 575.00 from holding Harmony Gold Mining or generate 153.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.52% |
| Values | Daily Returns |
Boston Beer vs. Harmony Gold Mining
Performance |
| Timeline |
| Boston Beer |
| Harmony Gold Mining |
Boston Beer and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Harmony Gold
The main advantage of trading using opposite Boston Beer and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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.| Boston Beer vs. Budweiser Brewing | Boston Beer vs. Fomento Economico Mexicano | Boston Beer vs. Heineken NV | Boston Beer vs. Suntory Beverage Food |
| Harmony Gold vs. Trupanion | Harmony Gold vs. Arm Holdings plc | Harmony Gold vs. Valens | Harmony Gold vs. IPG Photonics |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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