Correlation Between National Vision and Harmony Gold

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

Diversification Opportunities for National Vision and Harmony Gold

0.67

Correlation Coefficient

National Vision  Harmony Gold

Poor diversification

The 3 months correlation between National and Harmony is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings 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 Vision 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 Vision Holdings 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 Vision i.e., National Vision and Harmony Gold go up and down completely randomly.

Pair Corralation between National Vision and Harmony Gold

Considering the 90-day investment horizon National Vision is expected to generate 2.56 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, National Vision Holdings is 1.46 times less risky than Harmony Gold. It trades about 0.11 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  827.00  in Harmony Gold Mining on December 22, 2024 and sell it today you would earn a total of  373.00  from holding Harmony Gold Mining or generate 45.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	81.97%
Values	Daily Returns

National Vision Holdings  vs.  Harmony Gold Mining

National Vision Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, National Vision exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Harmony Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Vision and Harmony Gold

The main advantage of trading using opposite National Vision and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Vision 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 Vision Holdings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.