Correlation Between Harmony Gold and CapitaLand Investment

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

Diversification Opportunities for Harmony Gold and CapitaLand Investment

-0.03

Correlation Coefficient

Harmony Gold  CapitaLand Investment

Good diversification

The 3 months correlation between Harmony and CapitaLand is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment 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 CapitaLand Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CapitaLand Investment has no effect on the direction of Harmony Gold i.e., Harmony Gold and CapitaLand Investment go up and down completely randomly.

Pair Corralation between Harmony Gold and CapitaLand Investment

Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the CapitaLand Investment. In addition to that, Harmony Gold is 1.3 times more volatile than CapitaLand Investment Limited. It trades about -0.02 of its total potential returns per unit of risk. CapitaLand Investment Limited is currently generating about -0.01 per unit of volatility. If you would invest  206.00  in CapitaLand Investment Limited on September 17, 2024 and sell it today you would lose (7.00) from holding CapitaLand Investment Limited or give up 3.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Harmony Gold Mining  vs.  CapitaLand Investment Limited

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 fundamental indicators, Harmony Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CapitaLand Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CapitaLand Investment Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, CapitaLand Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Harmony Gold and CapitaLand Investment

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

The idea behind Harmony Gold Mining and CapitaLand Investment Limited 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.