Correlation Between Harmony Gold and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and NexGen Energy 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 NexGen Energy 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 NexGen Energy, you can compare the effects of market volatilities on Harmony Gold and NexGen Energy 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 NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and NexGen Energy.
Diversification Opportunities for Harmony Gold and NexGen Energy
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Harmony and NexGen is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy 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 NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of Harmony Gold i.e., Harmony Gold and NexGen Energy go up and down completely randomly.
Pair Corralation between Harmony Gold and NexGen Energy
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 0.76 times more return on investment than NexGen Energy. However, Harmony Gold Mining is 1.32 times less risky than NexGen Energy. It trades about 0.24 of its potential returns per unit of risk. NexGen Energy is currently generating about -0.11 per unit of risk. If you would invest 770.00 in Harmony Gold Mining on December 26, 2024 and sell it today you would earn a total of 380.00 from holding Harmony Gold Mining or generate 49.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.39% |
Values | Daily Returns |
Harmony Gold Mining vs. NexGen Energy
Performance |
Timeline |
Harmony Gold Mining |
NexGen Energy |
Harmony Gold and NexGen Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Harmony Gold and NexGen Energy
The main advantage of trading using opposite Harmony Gold and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, NexGen Energy 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 NexGen Energy will offset losses from the drop in NexGen Energy's long position.Harmony Gold vs. Playa Hotels Resorts | Harmony Gold vs. USWE SPORTS AB | Harmony Gold vs. UNIVERSAL DISPLAY | Harmony Gold vs. ULTRA CLEAN HLDGS |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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