Correlation Between Harmony Gold and Invion

Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Invion 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 Invion 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 Invion Limited, you can compare the effects of market volatilities on Harmony Gold and Invion 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 Invion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Invion.

Diversification Opportunities for Harmony Gold and Invion

-0.25

Correlation Coefficient

Harmony Gold  Invion

Very good diversification

The 3 months correlation between Harmony and Invion is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Invion Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invion Limited 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 Invion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invion Limited has no effect on the direction of Harmony Gold i.e., Harmony Gold and Invion go up and down completely randomly.

Pair Corralation between Harmony Gold and Invion

Assuming the 90 days horizon Harmony Gold is expected to generate 52.44 times less return on investment than Invion. But when comparing it to its historical volatility, Harmony Gold Mining is 29.37 times less risky than Invion. It trades about 0.08 of its potential returns per unit of risk. Invion Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Invion Limited on October 3, 2024 and sell it today you would earn a total of  3.00  from holding Invion Limited or generate 20.0% return on investment over 90 days.

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

Harmony Gold Mining  vs.  Invion Limited

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.

Invion Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invion Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Invion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harmony Gold and Invion

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

The idea behind Harmony Gold Mining and Invion Limited 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 Commodity Directory module to find actively traded commodities issued by global exchanges.