Correlation Between Harmony Gold and Games Workshop

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

Diversification Opportunities for Harmony Gold and Games Workshop

-0.55

Correlation Coefficient

Harmony Gold  Games Workshop

Excellent diversification

The 3 months correlation between Harmony and Games is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Games Workshop Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Games Workshop Group 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 Games Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Games Workshop Group has no effect on the direction of Harmony Gold i.e., Harmony Gold and Games Workshop go up and down completely randomly.

Pair Corralation between Harmony Gold and Games Workshop

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 1.55 times more return on investment than Games Workshop. However, Harmony Gold is 1.55 times more volatile than Games Workshop Group. It trades about 0.08 of its potential returns per unit of risk. Games Workshop Group is currently generating about 0.08 per unit of risk. If you would invest  585.00  in Harmony Gold Mining on October 24, 2024 and sell it today you would earn a total of  370.00  from holding Harmony Gold Mining or generate 63.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Harmony Gold Mining  vs.  Games Workshop Group

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.

Games Workshop Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Games Workshop unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harmony Gold and Games Workshop

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

The idea behind Harmony Gold Mining and Games Workshop Group 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.