Correlation Between United Airlines and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both United Airlines 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 United Airlines and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Airlines Holdings and Harmony Gold Mining, you can compare the effects of market volatilities on United Airlines 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 United Airlines with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Harmony Gold.
Diversification Opportunities for United Airlines and Harmony Gold
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Harmony is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings 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 United Airlines 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 United Airlines Holdings 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 United Airlines i.e., United Airlines and Harmony Gold go up and down completely randomly.
Pair Corralation between United Airlines and Harmony Gold
Considering the 90-day investment horizon United Airlines is expected to generate 1.39 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, United Airlines Holdings is 1.5 times less risky than Harmony Gold. It trades about 0.25 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 827.00 in Harmony Gold Mining on November 1, 2024 and sell it today you would earn a total of 122.00 from holding Harmony Gold Mining or generate 14.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Harmony Gold Mining
Performance |
| Timeline |
| United Airlines Holdings |
| Harmony Gold Mining |
United Airlines and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Harmony Gold
The main advantage of trading using opposite United Airlines and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines 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.| United Airlines vs. American Airlines Group | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways Corp | United Airlines vs. Delta Air Lines |
| Harmony Gold vs. Stepstone Group | Harmony Gold vs. Transcontinental Realty Investors | Harmony Gold vs. Aperture Health | Harmony Gold vs. Xiabuxiabu Catering Management |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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