Correlation Between Entegris and Harmony Gold

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

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

Diversification Opportunities for Entegris and Harmony Gold

-0.14

Correlation Coefficient

Entegris  Harmony Gold

Good diversification

The 3 months correlation between Entegris and Harmony is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Entegris 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 Entegris 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 Entegris 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 Entegris i.e., Entegris and Harmony Gold go up and down completely randomly.

Pair Corralation between Entegris and Harmony Gold

Given the investment horizon of 90 days Entegris is expected to generate 6.52 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Entegris is 1.52 times less risky than Harmony Gold. It trades about 0.04 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  632.00  in Harmony Gold Mining on February 11, 2024 and sell it today you would earn a total of  268.00  from holding Harmony Gold Mining or generate 42.41% return on investment over 90 days.

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

Entegris  vs.  Harmony Gold Mining

Entegris

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Entegris are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Entegris is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Harmony Gold Mining

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Harmony Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entegris and Harmony Gold

The main advantage of trading using opposite Entegris and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entegris 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 Entegris 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.