Correlation Between SVENSKA AEROGEL and Harmony Gold

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

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

Diversification Opportunities for SVENSKA AEROGEL and Harmony Gold

-0.22

Correlation Coefficient

SVENSKA AEROGEL  Harmony Gold

Very good diversification

The 3 months correlation between SVENSKA and Harmony is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SVENSKA AEROGEL HOLDING 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 SVENSKA AEROGEL 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 SVENSKA AEROGEL HOLDING 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 SVENSKA AEROGEL i.e., SVENSKA AEROGEL and Harmony Gold go up and down completely randomly.

Pair Corralation between SVENSKA AEROGEL and Harmony Gold

Assuming the 90 days horizon SVENSKA AEROGEL HOLDING is expected to generate 76.93 times more return on investment than Harmony Gold. However, SVENSKA AEROGEL is 76.93 times more volatile than Harmony Gold Mining. It trades about 0.27 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.06 per unit of risk. If you would invest  371.00  in SVENSKA AEROGEL HOLDING on October 4, 2024 and sell it today you would lose (321.00) from holding SVENSKA AEROGEL HOLDING or give up 86.52% of portfolio value over 90 days.

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

SVENSKA AEROGEL HOLDING  vs.  Harmony Gold Mining

SVENSKA AEROGEL HOLDING

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SVENSKA AEROGEL HOLDING are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SVENSKA AEROGEL reported solid returns over the last few months and may actually be approaching a breakup point.

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 fragile 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 SVENSKA AEROGEL and Harmony Gold

The main advantage of trading using opposite SVENSKA AEROGEL and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SVENSKA AEROGEL 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 SVENSKA AEROGEL HOLDING 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.