Correlation Between United States and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both United States 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 States 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 States Steel and Harmony Gold Mining, you can compare the effects of market volatilities on United States 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 States with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Harmony Gold.
Diversification Opportunities for United States and Harmony Gold
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Harmony is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel 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 States 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 States Steel 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 States i.e., United States and Harmony Gold go up and down completely randomly.
Pair Corralation between United States and Harmony Gold
Given the investment horizon of 90 days United States Steel is expected to generate 1.83 times more return on investment than Harmony Gold. However, United States is 1.83 times more volatile than Harmony Gold Mining. It trades about 0.28 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.51 per unit of risk. If you would invest 1,202,500 in United States Steel on October 20, 2024 and sell it today you would earn a total of 230,000 from holding United States Steel or generate 19.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Harmony Gold Mining
Performance |
| Timeline |
| United States Steel |
| Harmony Gold Mining |
United States and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Harmony Gold
The main advantage of trading using opposite United States and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 States vs. Pfizer Inc | United States vs. Instituto Rosenbusch SA | United States vs. Sociedad Comercial del | United States vs. Ledesma SAAI |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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