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
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Harmony is -0.65. 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
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.88 times more return on investment than Harmony Gold. However, United Airlines Holdings is 1.14 times less risky than Harmony Gold. It trades about 0.16 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.05 per unit of risk. If you would invest 4,368 in United Airlines Holdings on October 25, 2024 and sell it today you would earn a total of 6,382 from holding United Airlines Holdings or generate 146.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| 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. Delta Air Lines | United Airlines vs. Air China Limited | United Airlines vs. AIR CHINA LTD | United Airlines vs. RYANAIR HLDGS ADR |
| Harmony Gold vs. Nippon Light Metal | Harmony Gold vs. Stag Industrial | Harmony Gold vs. Forsys Metals Corp | Harmony Gold vs. Jacquet Metal Service |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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