Correlation Between Banco De and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Banco De 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 Banco De and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco de Valores and Harmony Gold Mining, you can compare the effects of market volatilities on Banco De 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 Banco De with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and Harmony Gold.
Diversification Opportunities for Banco De and Harmony Gold
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Banco and Harmony is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Banco de Valores 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 Banco De 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 Banco de Valores 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 Banco De i.e., Banco De and Harmony Gold go up and down completely randomly.
Pair Corralation between Banco De and Harmony Gold
Assuming the 90 days trading horizon Banco De is expected to generate 2.71 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Banco de Valores is 1.45 times less risky than Harmony Gold. It trades about 0.27 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 961,000 in Harmony Gold Mining on October 20, 2024 and sell it today you would earn a total of 191,500 from holding Harmony Gold Mining or generate 19.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco de Valores vs. Harmony Gold Mining
Performance |
| Timeline |
| Banco de Valores |
| Harmony Gold Mining |
Banco De and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco De and Harmony Gold
The main advantage of trading using opposite Banco De and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco De 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.| Banco De vs. Matba Rofex SA | Banco De vs. Compania de Transporte | Banco De vs. American Express Co | Banco De vs. Transportadora de Gas |
| Harmony Gold vs. United States Steel | Harmony Gold vs. Compania de Transporte | Harmony Gold vs. Agrometal SAI |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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