Correlation Between Harmony Gold and Isetan Mitsukoshi

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

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

Diversification Opportunities for Harmony Gold and Isetan Mitsukoshi

-0.48

Correlation Coefficient

Harmony Gold  Isetan Mitsukoshi

Very good diversification

The 3 months correlation between Harmony and Isetan is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Isetan Mitsukoshi Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isetan Mitsukoshi and Harmony Gold 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 Harmony Gold Mining are associated (or correlated) with Isetan Mitsukoshi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isetan Mitsukoshi has no effect on the direction of Harmony Gold i.e., Harmony Gold and Isetan Mitsukoshi go up and down completely randomly.

Pair Corralation between Harmony Gold and Isetan Mitsukoshi

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 0.9 times more return on investment than Isetan Mitsukoshi. However, Harmony Gold Mining is 1.11 times less risky than Isetan Mitsukoshi. It trades about 0.16 of its potential returns per unit of risk. Isetan Mitsukoshi Holdings is currently generating about 0.14 per unit of risk. If you would invest  860.00  in Harmony Gold Mining on October 26, 2024 and sell it today you would earn a total of  130.00  from holding Harmony Gold Mining or generate 15.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

Harmony Gold Mining  vs.  Isetan Mitsukoshi Holdings

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 nearly stable basic indicators, Harmony Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Isetan Mitsukoshi

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Isetan Mitsukoshi Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Isetan Mitsukoshi reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harmony Gold and Isetan Mitsukoshi

The main advantage of trading using opposite Harmony Gold and Isetan Mitsukoshi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Isetan Mitsukoshi 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 Isetan Mitsukoshi will offset losses from the drop in Isetan Mitsukoshi's long position.

The idea behind Harmony Gold Mining and Isetan Mitsukoshi Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.