Correlation Between Harmony Gold and LKQ
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and LKQ 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 Harmony Gold and LKQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harmony Gold Mining and LKQ Corporation, you can compare the effects of market volatilities on Harmony Gold and LKQ 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 Harmony Gold with a short position of LKQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and LKQ.
Diversification Opportunities for Harmony Gold and LKQ
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harmony and LKQ is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and LKQ Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LKQ Corporation and Harmony Gold 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 Harmony Gold Mining are associated (or correlated) with LKQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LKQ Corporation has no effect on the direction of Harmony Gold i.e., Harmony Gold and LKQ go up and down completely randomly.
Pair Corralation between Harmony Gold and LKQ
Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the LKQ. In addition to that, Harmony Gold is 1.44 times more volatile than LKQ Corporation. It trades about -0.14 of its total potential returns per unit of risk. LKQ Corporation is currently generating about -0.19 per unit of volatility. If you would invest 3,720 in LKQ Corporation on October 10, 2024 and sell it today you would lose (240.00) from holding LKQ Corporation or give up 6.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Harmony Gold Mining vs. LKQ Corp.
Performance |
Timeline |
Harmony Gold Mining |
LKQ Corporation |
Harmony Gold and LKQ Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Harmony Gold and LKQ
The main advantage of trading using opposite Harmony Gold and LKQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, LKQ 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 LKQ will offset losses from the drop in LKQ's long position.Harmony Gold vs. TRADELINK ELECTRON | Harmony Gold vs. FLOW TRADERS LTD | Harmony Gold vs. H2O Retailing | Harmony Gold vs. Canon Marketing Japan |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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