Correlation Between San Miguel and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both San Miguel 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 San Miguel and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between San Miguel AG and Harmony Gold Mining, you can compare the effects of market volatilities on San Miguel 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 San Miguel with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Miguel and Harmony Gold.
Diversification Opportunities for San Miguel and Harmony Gold
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between San and Harmony is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding San Miguel AG 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 San Miguel 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 San Miguel AG 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 San Miguel i.e., San Miguel and Harmony Gold go up and down completely randomly.
Pair Corralation between San Miguel and Harmony Gold
Assuming the 90 days trading horizon San Miguel AG is expected to generate 0.82 times more return on investment than Harmony Gold. However, San Miguel AG is 1.22 times less risky than Harmony Gold. It trades about 0.13 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.02 per unit of risk. If you would invest 78,750 in San Miguel AG on September 3, 2024 and sell it today you would earn a total of 51,250 from holding San Miguel AG or generate 65.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
San Miguel AG vs. Harmony Gold Mining
Performance |
| Timeline |
| San Miguel AG |
| Harmony Gold Mining |
San Miguel and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with San Miguel and Harmony Gold
The main advantage of trading using opposite San Miguel and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Miguel 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.| San Miguel vs. United States Steel | San Miguel vs. Compania de Transporte | San Miguel vs. Harmony Gold Mining | San Miguel vs. Transportadora de Gas |
| Harmony Gold vs. Longvie SA | Harmony Gold vs. United States Steel | Harmony Gold vs. Capex SA | Harmony Gold vs. Pfizer Inc |
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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