Correlation Between Gold Terra and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Gold Terra 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 Gold Terra and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Terra Resource and Harmony Gold Mining, you can compare the effects of market volatilities on Gold Terra 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 Gold Terra with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Terra and Harmony Gold.
Diversification Opportunities for Gold Terra and Harmony Gold
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gold and Harmony is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Gold Terra Resource 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 Gold Terra 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 Gold Terra Resource 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 Gold Terra i.e., Gold Terra and Harmony Gold go up and down completely randomly.
Pair Corralation between Gold Terra and Harmony Gold
Assuming the 90 days horizon Gold Terra Resource is expected to generate 2.76 times more return on investment than Harmony Gold. However, Gold Terra is 2.76 times more volatile than Harmony Gold Mining. It trades about 0.04 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.07 per unit of risk. If you would invest 3.90 in Gold Terra Resource on September 13, 2024 and sell it today you would earn a total of 0.01 from holding Gold Terra Resource or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Terra Resource vs. Harmony Gold Mining
Performance |
| Timeline |
| Gold Terra Resource |
| Harmony Gold Mining |
Gold Terra and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Terra and Harmony Gold
The main advantage of trading using opposite Gold Terra and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Terra 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.| Gold Terra vs. Revival Gold | Gold Terra vs. Galiano Gold | Gold Terra vs. US Gold Corp | Gold Terra vs. HUMANA INC |
| Harmony Gold vs. Fortitude Gold Corp | Harmony Gold vs. New Gold | Harmony Gold vs. Galiano Gold | Harmony Gold vs. GoldMining |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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