Correlation Between Taiwan Semiconductor and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Taiwan Semiconductor 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 Taiwan Semiconductor and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Semiconductor Manufacturing and Harmony Gold Mining, you can compare the effects of market volatilities on Taiwan Semiconductor 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 Taiwan Semiconductor with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Semiconductor and Harmony Gold.
Diversification Opportunities for Taiwan Semiconductor and Harmony Gold
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Harmony is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Semiconductor Manufactu 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 Taiwan Semiconductor 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 Taiwan Semiconductor Manufacturing 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 Taiwan Semiconductor i.e., Taiwan Semiconductor and Harmony Gold go up and down completely randomly.
Pair Corralation between Taiwan Semiconductor and Harmony Gold
Assuming the 90 days trading horizon Taiwan Semiconductor is expected to generate 1.31 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Taiwan Semiconductor Manufacturing is 1.48 times less risky than Harmony Gold. It trades about 0.09 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 324.00 in Harmony Gold Mining on August 28, 2024 and sell it today you would earn a total of 606.00 from holding Harmony Gold Mining or generate 187.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Semiconductor Manufactu vs. Harmony Gold Mining
Performance |
| Timeline |
| Taiwan Semiconductor |
| Harmony Gold Mining |
Taiwan Semiconductor and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Semiconductor and Harmony Gold
The main advantage of trading using opposite Taiwan Semiconductor and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Semiconductor 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.| Taiwan Semiconductor vs. KINGBOARD CHEMICAL | Taiwan Semiconductor vs. CN MODERN DAIRY | Taiwan Semiconductor vs. Food Life Companies | Taiwan Semiconductor vs. CONAGRA FOODS |
| Harmony Gold vs. Franco Nevada | Harmony Gold vs. Agnico Eagle Mines | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. NMI Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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