Correlation Between Harmony Gold and Banco Macro

Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Banco Macro 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 Banco Macro 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 Banco Macro SA, you can compare the effects of market volatilities on Harmony Gold and Banco Macro 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 Banco Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Banco Macro.

Diversification Opportunities for Harmony Gold and Banco Macro

-0.46

Correlation Coefficient

Harmony Gold  Banco Macro

Very good diversification

The 3 months correlation between Harmony and Banco is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Banco Macro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Macro SA 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 Banco Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Macro SA has no effect on the direction of Harmony Gold i.e., Harmony Gold and Banco Macro go up and down completely randomly.

Pair Corralation between Harmony Gold and Banco Macro

Assuming the 90 days trading horizon Harmony Gold Mining is expected to under-perform the Banco Macro. In addition to that, Harmony Gold is 1.36 times more volatile than Banco Macro SA. It trades about -0.09 of its total potential returns per unit of risk. Banco Macro SA is currently generating about 0.1 per unit of volatility. If you would invest  834,000  in Banco Macro SA on September 14, 2024 and sell it today you would earn a total of  124,000  from holding Banco Macro SA or generate 14.87% 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.  Banco Macro SA

Harmony Gold Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harmony Gold Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Banco Macro SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Macro SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Banco Macro sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harmony Gold and Banco Macro

The main advantage of trading using opposite Harmony Gold and Banco Macro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Banco Macro 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 Banco Macro will offset losses from the drop in Banco Macro's long position.

The idea behind Harmony Gold Mining and Banco Macro SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.