Correlation Between Harmony Gold and Welltower

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

Diversification Opportunities for Harmony Gold and Welltower

0.74

Correlation Coefficient

Harmony Gold  Welltower

Poor diversification

The 3 months correlation between Harmony and Welltower is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower 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 Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of Harmony Gold i.e., Harmony Gold and Welltower go up and down completely randomly.

Pair Corralation between Harmony Gold and Welltower

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 1.99 times more return on investment than Welltower. However, Harmony Gold is 1.99 times more volatile than Welltower. It trades about 0.22 of its potential returns per unit of risk. Welltower is currently generating about 0.16 per unit of risk. If you would invest  780.00  in Harmony Gold Mining on December 22, 2024 and sell it today you would earn a total of  350.00  from holding Harmony Gold Mining or generate 44.87% return on investment over 90 days.

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

Harmony Gold Mining  vs.  Welltower

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

Welltower

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Welltower are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Welltower reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harmony Gold and Welltower

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

The idea behind Harmony Gold Mining and Welltower 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.