Correlation Between Harmony Gold and Nordic Semiconductor

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

Diversification Opportunities for Harmony Gold and Nordic Semiconductor

0.26

Correlation Coefficient

Harmony Gold  Nordic Semiconductor

Modest diversification

The 3 months correlation between Harmony and Nordic is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA 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 Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of Harmony Gold i.e., Harmony Gold and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between Harmony Gold and Nordic Semiconductor

Assuming the 90 days horizon Harmony Gold is expected to generate 19.95 times less return on investment than Nordic Semiconductor. In addition to that, Harmony Gold is 1.54 times more volatile than Nordic Semiconductor ASA. It trades about 0.0 of its total potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.1 per unit of volatility. If you would invest  917.00  in Nordic Semiconductor ASA on October 26, 2024 and sell it today you would earn a total of  101.00  from holding Nordic Semiconductor ASA or generate 11.01% return on investment over 90 days.

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

Harmony Gold Mining  vs.  Nordic Semiconductor ASA

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.

Nordic Semiconductor ASA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Semiconductor ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nordic Semiconductor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Harmony Gold and Nordic Semiconductor

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

The idea behind Harmony Gold Mining and Nordic Semiconductor ASA 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.