Correlation Between INTEL and Harmony Gold

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Can any of the company-specific risk be diversified away by investing in both INTEL 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 INTEL and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTEL P 41 and Harmony Gold Mining, you can compare the effects of market volatilities on INTEL 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 INTEL with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTEL and Harmony Gold.

Diversification Opportunities for INTEL and Harmony Gold

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between INTEL and Harmony is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding INTEL P 41 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 INTEL 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 INTEL P 41 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 INTEL i.e., INTEL and Harmony Gold go up and down completely randomly.

Pair Corralation between INTEL and Harmony Gold

Assuming the 90 days trading horizon INTEL is expected to generate 2.07 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, INTEL P 41 is 1.97 times less risky than Harmony Gold. It trades about 0.04 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  858.00  in Harmony Gold Mining on September 3, 2024 and sell it today you would earn a total of  92.00  from holding Harmony Gold Mining or generate 10.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy96.75%
ValuesDaily Returns

INTEL P 41  vs.  Harmony Gold Mining

 Performance 
       Timeline  
INTEL P 41 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in INTEL P 41 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, INTEL sustained solid returns over the last few months and may actually be approaching a breakup point.
Harmony Gold Mining 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Harmony Gold Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Harmony Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

INTEL and Harmony Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with INTEL and Harmony Gold

The main advantage of trading using opposite INTEL and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTEL 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.
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The idea behind INTEL P 41 and Harmony Gold Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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