Correlation Between Solstad Offshore and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore 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 Solstad Offshore and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solstad Offshore ASA and Harmony Gold Mining, you can compare the effects of market volatilities on Solstad Offshore 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 Solstad Offshore with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Harmony Gold.
Diversification Opportunities for Solstad Offshore and Harmony Gold
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Solstad and Harmony is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA 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 Solstad Offshore 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 Solstad Offshore ASA 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 Solstad Offshore i.e., Solstad Offshore and Harmony Gold go up and down completely randomly.
Pair Corralation between Solstad Offshore and Harmony Gold
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to under-perform the Harmony Gold. But the stock apears to be less risky and, when comparing its historical volatility, Solstad Offshore ASA is 1.37 times less risky than Harmony Gold. The stock trades about -0.07 of its potential returns per unit of risk. The Harmony Gold Mining is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 855.00 in Harmony Gold Mining on November 27, 2024 and sell it today you would earn a total of 175.00 from holding Harmony Gold Mining or generate 20.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Harmony Gold Mining
Performance |
| Timeline |
| Solstad Offshore ASA |
| Harmony Gold Mining |
Solstad Offshore and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Harmony Gold
The main advantage of trading using opposite Solstad Offshore and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore 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.| Solstad Offshore vs. ANGI Homeservices | Solstad Offshore vs. LEONS FURNITURE | Solstad Offshore vs. American Eagle Outfitters | Solstad Offshore vs. CENTURIA OFFICE REIT |
| Harmony Gold vs. AEON METALS LTD | Harmony Gold vs. Jacquet Metal Service | Harmony Gold vs. Stag Industrial | Harmony Gold vs. SIERRA METALS |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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