Correlation Between Thai Beverage and Harmony Gold

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

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

Diversification Opportunities for Thai Beverage and Harmony Gold

-0.62

Correlation Coefficient

Thai Beverage  Harmony Gold

Excellent diversification

The 3 months correlation between Thai and Harmony is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public 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 Thai Beverage 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 Thai Beverage Public 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 Thai Beverage i.e., Thai Beverage and Harmony Gold go up and down completely randomly.

Pair Corralation between Thai Beverage and Harmony Gold

Assuming the 90 days horizon Thai Beverage Public is expected to under-perform the Harmony Gold. In addition to that, Thai Beverage is 1.06 times more volatile than Harmony Gold Mining. It trades about -0.01 of its total potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.25 per unit of volatility. If you would invest  780.00  in Harmony Gold Mining on December 29, 2024 and sell it today you would earn a total of  430.00  from holding Harmony Gold Mining or generate 55.13% return on investment over 90 days.

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

Thai Beverage Public  vs.  Harmony Gold Mining

Thai Beverage Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai Beverage Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Thai Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Harmony Gold Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Harmony Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thai Beverage and Harmony Gold

The main advantage of trading using opposite Thai Beverage and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Beverage 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 Thai Beverage Public 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.