Correlation Between Dipula Income and Harmony Gold

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

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

Diversification Opportunities for Dipula Income and Harmony Gold

-0.41

Correlation Coefficient

Dipula Income  Harmony Gold

Very good diversification

The 3 months correlation between Dipula and Harmony is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dipula Income 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 Dipula Income 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 Dipula Income 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 Dipula Income i.e., Dipula Income and Harmony Gold go up and down completely randomly.

Pair Corralation between Dipula Income and Harmony Gold

Assuming the 90 days trading horizon Dipula Income is expected to under-perform the Harmony Gold. But the stock apears to be less risky and, when comparing its historical volatility, Dipula Income is 1.86 times less risky than Harmony Gold. The stock trades about -0.03 of its potential returns per unit of risk. The Harmony Gold Mining is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,523,700  in Harmony Gold Mining on December 30, 2024 and sell it today you would earn a total of  1,062,400  from holding Harmony Gold Mining or generate 69.73% return on investment over 90 days.

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

Dipula Income  vs.  Harmony Gold Mining

Dipula Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dipula Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Dipula Income is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Harmony Gold Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Harmony Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dipula Income and Harmony Gold

The main advantage of trading using opposite Dipula Income and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dipula Income 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 Dipula Income 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.