Correlation Between Westlake Chemical and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical 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 Westlake Chemical and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical and Harmony Gold Mining, you can compare the effects of market volatilities on Westlake Chemical 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 Westlake Chemical with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Harmony Gold.
Diversification Opportunities for Westlake Chemical and Harmony Gold
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Westlake and Harmony is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical 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 Westlake Chemical 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 Westlake Chemical 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 Westlake Chemical i.e., Westlake Chemical and Harmony Gold go up and down completely randomly.
Pair Corralation between Westlake Chemical and Harmony Gold
Assuming the 90 days horizon Westlake Chemical is expected to under-perform the Harmony Gold. But the stock apears to be less risky and, when comparing its historical volatility, Westlake Chemical is 2.1 times less risky than Harmony Gold. The stock trades about -0.09 of its potential returns per unit of risk. The Harmony Gold Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 850.00 in Harmony Gold Mining on September 13, 2024 and sell it today you would earn a total of 15.00 from holding Harmony Gold Mining or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westlake Chemical vs. Harmony Gold Mining
Performance |
| Timeline |
| Westlake Chemical |
| Harmony Gold Mining |
Westlake Chemical and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Harmony Gold
The main advantage of trading using opposite Westlake Chemical and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical 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.| Westlake Chemical vs. Albemarle | Westlake Chemical vs. Superior Plus Corp | Westlake Chemical vs. SIVERS SEMICONDUCTORS AB | Westlake Chemical vs. Norsk Hydro ASA |
| Harmony Gold vs. Franco Nevada | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. SIVERS SEMICONDUCTORS AB | Harmony Gold vs. Norsk Hydro ASA |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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