Correlation Between Compania and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Compania 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 Compania and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania de Transporte and Harmony Gold Mining, you can compare the effects of market volatilities on Compania 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 Compania with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Harmony Gold.
Diversification Opportunities for Compania and Harmony Gold
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compania and Harmony is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Transporte 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 Compania 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 Compania de Transporte 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 Compania i.e., Compania and Harmony Gold go up and down completely randomly.
Pair Corralation between Compania and Harmony Gold
Assuming the 90 days trading horizon Compania de Transporte is expected to generate 1.02 times more return on investment than Harmony Gold. However, Compania is 1.02 times more volatile than Harmony Gold Mining. It trades about 0.16 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.14 per unit of risk. If you would invest 13,975 in Compania de Transporte on August 26, 2024 and sell it today you would earn a total of 200,525 from holding Compania de Transporte or generate 1434.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania de Transporte vs. Harmony Gold Mining
Performance |
| Timeline |
| Compania de Transporte |
| Harmony Gold Mining |
Compania and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Harmony Gold
The main advantage of trading using opposite Compania and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania 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.| Compania vs. Pampa Energia SA | Compania vs. United States Steel | Compania vs. Pfizer Inc | Compania vs. Distribuidora de Gas |
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 Stocks Directory module to find actively traded stocks across global markets.
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