Correlation Between Harmony Gold and Bidvest

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

Diversification Opportunities for Harmony Gold and Bidvest

-0.59

Correlation Coefficient

Harmony Gold  Bidvest

Excellent diversification

The 3 months correlation between Harmony and Bidvest is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Bidvest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bidvest 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 Bidvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bidvest Group has no effect on the direction of Harmony Gold i.e., Harmony Gold and Bidvest go up and down completely randomly.

Pair Corralation between Harmony Gold and Bidvest

Assuming the 90 days trading horizon Harmony Gold Mining is expected to generate 2.32 times more return on investment than Bidvest. However, Harmony Gold is 2.32 times more volatile than Bidvest Group. It trades about 0.3 of its potential returns per unit of risk. Bidvest Group is currently generating about -0.09 per unit of risk. If you would invest  1,523,700  in Harmony Gold Mining on December 29, 2024 and sell it today you would earn a total of  1,062,400  from holding Harmony Gold Mining or generate 69.73% return on investment over 90 days.

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

Harmony Gold Mining  vs.  Bidvest Group

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 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Harmony Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bidvest Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bidvest Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Harmony Gold and Bidvest

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

The idea behind Harmony Gold Mining and Bidvest 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 Stocks Directory module to find actively traded stocks across global markets.