Correlation Between Meta Platforms, and Harmony Gold

Can any of the company-specific risk be diversified away by investing in both Meta Platforms, and Harmony Gold 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 Meta Platforms, and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Meta Platforms, and Harmony Gold Mining, you can compare the effects of market volatilities on Meta Platforms, and Harmony Gold 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 Meta Platforms, with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms, and Harmony Gold.

Diversification Opportunities for Meta Platforms, and Harmony Gold

0.28

Correlation Coefficient

Meta Platforms,  Harmony Gold

Modest diversification

The 3 months correlation between Meta and Harmony is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms, and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining and Meta Platforms, 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 Meta Platforms, are associated (or correlated) with Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Meta Platforms, i.e., Meta Platforms, and Harmony Gold go up and down completely randomly.

Pair Corralation between Meta Platforms, and Harmony Gold

Assuming the 90 days trading horizon Meta Platforms, is expected to generate 0.51 times more return on investment than Harmony Gold. However, Meta Platforms, is 1.97 times less risky than Harmony Gold. It trades about 0.06 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.06 per unit of risk. If you would invest  2,692,496  in Meta Platforms, on September 30, 2024 and sell it today you would earn a total of  257,504  from holding Meta Platforms, or generate 9.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Meta Platforms,  vs.  Harmony Gold Mining

Meta Platforms,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meta Platforms, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Meta Platforms, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Meta Platforms, and Harmony Gold

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

The idea behind Meta Platforms, and Harmony Gold Mining 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..