Correlation Between SILVER BULLET and Harmony Gold

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

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

Diversification Opportunities for SILVER BULLET and Harmony Gold

-0.43

Correlation Coefficient

SILVER BULLET  Harmony Gold

Very good diversification

The 3 months correlation between SILVER and Harmony is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SILVER BULLET DATA 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 SILVER BULLET 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 SILVER BULLET DATA 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 SILVER BULLET i.e., SILVER BULLET and Harmony Gold go up and down completely randomly.

Pair Corralation between SILVER BULLET and Harmony Gold

Assuming the 90 days horizon SILVER BULLET is expected to generate 1.61 times less return on investment than Harmony Gold. In addition to that, SILVER BULLET is 1.68 times more volatile than Harmony Gold Mining. It trades about 0.03 of its total potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.07 per unit of volatility. If you would invest  341.00  in Harmony Gold Mining on October 11, 2024 and sell it today you would earn a total of  464.00  from holding Harmony Gold Mining or generate 136.07% return on investment over 90 days.

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

SILVER BULLET DATA  vs.  Harmony Gold Mining

SILVER BULLET DATA

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SILVER BULLET DATA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SILVER BULLET 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 SILVER BULLET and Harmony Gold

The main advantage of trading using opposite SILVER BULLET and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SILVER BULLET 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 SILVER BULLET DATA 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.

Check out your portfolio center.

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.