Correlation Between Harmony Gold and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Meliá Hotels 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 Meliá Hotels 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 Meli Hotels International, you can compare the effects of market volatilities on Harmony Gold and Meliá Hotels 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 Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Meliá Hotels.
Diversification Opportunities for Harmony Gold and Meliá Hotels
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harmony and Meliá is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Meli Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meli Hotels International 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 Meliá Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meli Hotels International has no effect on the direction of Harmony Gold i.e., Harmony Gold and Meliá Hotels go up and down completely randomly.
Pair Corralation between Harmony Gold and Meliá Hotels
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 1.92 times more return on investment than Meliá Hotels. However, Harmony Gold is 1.92 times more volatile than Meli Hotels International. It trades about 0.06 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.04 per unit of risk. If you would invest 367.00 in Harmony Gold Mining on October 4, 2024 and sell it today you would earn a total of 413.00 from holding Harmony Gold Mining or generate 112.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Harmony Gold Mining vs. Meli Hotels International
Performance |
Timeline |
Harmony Gold Mining |
Meli Hotels International |
Harmony Gold and Meliá Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Harmony Gold and Meliá Hotels
The main advantage of trading using opposite Harmony Gold and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Meliá Hotels 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 Meliá Hotels will offset losses from the drop in Meliá Hotels' long position.Harmony Gold vs. Newmont | Harmony Gold vs. SIVERS SEMICONDUCTORS AB | Harmony Gold vs. Talanx AG | Harmony Gold vs. Norsk Hydro ASA |
Meliá Hotels vs. Hyatt Hotels | Meliá Hotels vs. InterContinental Hotels Group | Meliá Hotels vs. INTERCONT HOTELS | Meliá Hotels vs. Wyndham Hotels Resorts |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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