Correlation Between SBC Communications and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both SBC Communications 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 SBC Communications and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBC Communications and Harmony Gold Mining, you can compare the effects of market volatilities on SBC Communications 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 SBC Communications with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBC Communications and Harmony Gold.
Diversification Opportunities for SBC Communications and Harmony Gold
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBC and Harmony is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SBC Communications 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 SBC Communications 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 SBC Communications 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 SBC Communications i.e., SBC Communications and Harmony Gold go up and down completely randomly.
Pair Corralation between SBC Communications and Harmony Gold
Considering the 90-day investment horizon SBC Communications is expected to generate 1.67 times more return on investment than Harmony Gold. However, SBC Communications is 1.67 times more volatile than Harmony Gold Mining. It trades about -0.07 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.23 per unit of risk. If you would invest 595.00 in SBC Communications on October 9, 2024 and sell it today you would lose (50.00) from holding SBC Communications or give up 8.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBC Communications vs. Harmony Gold Mining
Performance |
| Timeline |
| SBC Communications |
| Harmony Gold Mining |
SBC Communications and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBC Communications and Harmony Gold
The main advantage of trading using opposite SBC Communications and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBC Communications 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.| SBC Communications vs. Forsys Metals Corp | SBC Communications vs. Artisan Partners Asset | SBC Communications vs. Summit Materials | SBC Communications vs. FS KKR Capital |
| Harmony Gold vs. Kenon Holdings | Harmony Gold vs. Transportadora de Gas | Harmony Gold vs. CenterPoint Energy | Harmony Gold vs. Consol Energy |
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 CEOs Directory module to screen CEOs from public companies around the world.
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