Correlation Between Harmony Gold and Kap Industrial
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Kap Industrial 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 Kap Industrial 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 Kap Industrial Holdings, you can compare the effects of market volatilities on Harmony Gold and Kap Industrial 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 Kap Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Kap Industrial.
Diversification Opportunities for Harmony Gold and Kap Industrial
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Harmony and Kap is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Kap Industrial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kap Industrial Holdings 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 Kap Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kap Industrial Holdings has no effect on the direction of Harmony Gold i.e., Harmony Gold and Kap Industrial go up and down completely randomly.
Pair Corralation between Harmony Gold and Kap Industrial
Assuming the 90 days trading horizon Harmony Gold Mining is expected to generate 0.99 times more return on investment than Kap Industrial. However, Harmony Gold Mining is 1.01 times less risky than Kap Industrial. It trades about 0.3 of its potential returns per unit of risk. Kap Industrial Holdings is currently generating about -0.05 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. Kap Industrial Holdings
Performance |
Timeline |
Harmony Gold Mining |
Kap Industrial Holdings |
Harmony Gold and Kap Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Harmony Gold and Kap Industrial
The main advantage of trading using opposite Harmony Gold and Kap Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Kap Industrial 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 Kap Industrial will offset losses from the drop in Kap Industrial's long position.Harmony Gold vs. Frontier Transport Holdings | Harmony Gold vs. Standard Bank Group | Harmony Gold vs. Reinet Investments SCA | Harmony Gold vs. Nedbank Group |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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