Correlation Between Trencor and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Trencor 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 Trencor and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trencor and Harmony Gold Mining, you can compare the effects of market volatilities on Trencor 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 Trencor with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trencor and Harmony Gold.
Diversification Opportunities for Trencor and Harmony Gold
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Trencor and Harmony is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Trencor 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 Trencor 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 Trencor 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 Trencor i.e., Trencor and Harmony Gold go up and down completely randomly.
Pair Corralation between Trencor and Harmony Gold
Assuming the 90 days trading horizon Trencor is expected to under-perform the Harmony Gold. In addition to that, Trencor is 7.99 times more volatile than Harmony Gold Mining. It trades about -0.2 of its total potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.01 per unit of volatility. If you would invest 2,007,700 in Harmony Gold Mining on November 28, 2024 and sell it today you would lose (22,800) from holding Harmony Gold Mining or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Trencor vs. Harmony Gold Mining
Performance |
| Timeline |
| Trencor |
| Harmony Gold Mining |
Trencor and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trencor and Harmony Gold
The main advantage of trading using opposite Trencor and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trencor 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.| Trencor vs. Frontier Transport Holdings | Trencor vs. Brimstone Investment | Trencor vs. Astral Foods | Trencor vs. RCL Foods |
| Harmony Gold vs. Safari Investments RSA | Harmony Gold vs. Zeder Investments | Harmony Gold vs. RCL Foods | Harmony Gold vs. African Media Entertainment |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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