Correlation Between Harmony Gold and Amkor Technology

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

Diversification Opportunities for Harmony Gold and Amkor Technology

-0.01

Correlation Coefficient

Harmony Gold  Amkor Technology

Good diversification

The 3 months correlation between Harmony and Amkor is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology 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 Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of Harmony Gold i.e., Harmony Gold and Amkor Technology go up and down completely randomly.

Pair Corralation between Harmony Gold and Amkor Technology

Considering the 90-day investment horizon Harmony Gold Mining is expected to generate 0.85 times more return on investment than Amkor Technology. However, Harmony Gold Mining is 1.17 times less risky than Amkor Technology. It trades about 0.23 of its potential returns per unit of risk. Amkor Technology is currently generating about -0.05 per unit of risk. If you would invest  802.00  in Harmony Gold Mining on January 30, 2024 and sell it today you would earn a total of  95.00  from holding Harmony Gold Mining or generate 11.85% return on investment over 90 days.

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

Harmony Gold Mining  vs.  Amkor Technology

Harmony Gold Mining

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Harmony Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Amkor Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amkor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Amkor Technology is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Harmony Gold and Amkor Technology

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

The idea behind Harmony Gold Mining and Amkor Technology 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.