Correlation Between National Beverage and Harmony Gold

Can any of the company-specific risk be diversified away by investing in both National 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 National 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 National Beverage Corp and Harmony Gold Mining, you can compare the effects of market volatilities on National 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 National Beverage with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Harmony Gold.

Diversification Opportunities for National Beverage and Harmony Gold

-0.44

Correlation Coefficient

National Beverage  Harmony Gold

Very good diversification

The 3 months correlation between National and Harmony is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp 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 National 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Harmony Gold go up and down completely randomly.

Pair Corralation between National Beverage and Harmony Gold

Assuming the 90 days horizon National Beverage Corp is expected to generate 0.48 times more return on investment than Harmony Gold. However, National Beverage Corp is 2.08 times less risky than Harmony Gold. It trades about 0.07 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.05 per unit of risk. If you would invest  4,120  in National Beverage Corp on September 22, 2024 and sell it today you would earn a total of  260.00  from holding National Beverage Corp or generate 6.31% return on investment over 90 days.

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

National Beverage Corp  vs.  Harmony Gold Mining

National Beverage Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, National Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with National Beverage and Harmony Gold

The main advantage of trading using opposite National Beverage and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National 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 National Beverage Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.