Correlation Between Harmony Gold and Waste Management

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

Diversification Opportunities for Harmony Gold and Waste Management

-0.13

Correlation Coefficient

Harmony Gold  Waste Management

Good diversification

The 3 months correlation between Harmony and Waste is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Harmony Gold i.e., Harmony Gold and Waste Management go up and down completely randomly.

Pair Corralation between Harmony Gold and Waste Management

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 2.74 times more return on investment than Waste Management. However, Harmony Gold is 2.74 times more volatile than Waste Management. It trades about 0.04 of its potential returns per unit of risk. Waste Management is currently generating about -0.14 per unit of risk. If you would invest  850.00  in Harmony Gold Mining on September 13, 2024 and sell it today you would earn a total of  15.00  from holding Harmony Gold Mining or generate 1.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Harmony Gold Mining  vs.  Waste Management

Harmony Gold Mining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Waste Management

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Waste Management may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Harmony Gold and Waste Management

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

The idea behind Harmony Gold Mining and Waste Management 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.