Correlation Between Banco Santander and Harmony Gold

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

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

Diversification Opportunities for Banco Santander and Harmony Gold

0.0

Correlation Coefficient

Banco Santander  Harmony Gold

Pay attention - limited upside

The 3 months correlation between Banco and Harmony is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Ro 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 Banco Santander 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 Banco Santander Ro 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 Banco Santander i.e., Banco Santander and Harmony Gold go up and down completely randomly.

Pair Corralation between Banco Santander and Harmony Gold

If you would invest  924,742  in Harmony Gold Mining on February 6, 2024 and sell it today you would earn a total of  28,358  from holding Harmony Gold Mining or generate 3.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Banco Santander Ro  vs.  Harmony Gold Mining

Banco Santander Ro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Santander Ro has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Banco Santander 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

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harmony Gold sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco Santander and Harmony Gold

The main advantage of trading using opposite Banco Santander and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander 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 Banco Santander Ro 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.