Correlation Between Harmony Gold and Alexander Forbes
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Alexander Forbes 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 Alexander Forbes 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 Alexander Forbes Grp, you can compare the effects of market volatilities on Harmony Gold and Alexander Forbes 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 Alexander Forbes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Alexander Forbes.
Diversification Opportunities for Harmony Gold and Alexander Forbes
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harmony and Alexander is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Alexander Forbes Grp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexander Forbes Grp 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 Alexander Forbes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexander Forbes Grp has no effect on the direction of Harmony Gold i.e., Harmony Gold and Alexander Forbes go up and down completely randomly.
Pair Corralation between Harmony Gold and Alexander Forbes
Assuming the 90 days trading horizon Harmony Gold Mining is expected to under-perform the Alexander Forbes. In addition to that, Harmony Gold is 1.14 times more volatile than Alexander Forbes Grp. It trades about -0.01 of its total potential returns per unit of risk. Alexander Forbes Grp is currently generating about 0.04 per unit of volatility. If you would invest 73,100 in Alexander Forbes Grp on October 7, 2024 and sell it today you would earn a total of 7,900 from holding Alexander Forbes Grp or generate 10.81% 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. Alexander Forbes Grp
Performance |
Timeline |
Harmony Gold Mining |
Alexander Forbes Grp |
Harmony Gold and Alexander Forbes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Harmony Gold and Alexander Forbes
The main advantage of trading using opposite Harmony Gold and Alexander Forbes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Alexander Forbes 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 Alexander Forbes will offset losses from the drop in Alexander Forbes' long position.Harmony Gold vs. RCL Foods | Harmony Gold vs. Reinet Investments SCA | Harmony Gold vs. Ascendis Health | Harmony Gold vs. Life Healthcare |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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