Correlation Between Harmony Gold and Merck
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Merck 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 Merck 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 Merck Company, you can compare the effects of market volatilities on Harmony Gold and Merck 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 Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Merck.
Diversification Opportunities for Harmony Gold and Merck
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harmony and Merck is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company 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 Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck Company has no effect on the direction of Harmony Gold i.e., Harmony Gold and Merck go up and down completely randomly.
Pair Corralation between Harmony Gold and Merck
Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the Merck. In addition to that, Harmony Gold is 2.35 times more volatile than Merck Company. It trades about -0.15 of its total potential returns per unit of risk. Merck Company is currently generating about 0.17 per unit of volatility. If you would invest 14,045 in Merck Company on October 10, 2024 and sell it today you would earn a total of 455.00 from holding Merck Company or generate 3.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Harmony Gold Mining vs. Merck Company
Performance |
Timeline |
Harmony Gold Mining |
Merck Company |
Harmony Gold and Merck Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Harmony Gold and Merck
The main advantage of trading using opposite Harmony Gold and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Merck 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 Merck will offset losses from the drop in Merck'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 |
Merck vs. Daito Trust Construction | Merck vs. Harmony Gold Mining | Merck vs. ARDAGH METAL PACDL 0001 | Merck vs. MAGNUM MINING EXP |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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