Correlation Between Harmony Gold and Hafnia

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

Diversification Opportunities for Harmony Gold and Hafnia

-0.07

Correlation Coefficient

Harmony Gold  Hafnia

Good diversification

The 3 months correlation between Harmony and Hafnia is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited 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 Hafnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hafnia Limited has no effect on the direction of Harmony Gold i.e., Harmony Gold and Hafnia go up and down completely randomly.

Pair Corralation between Harmony Gold and Hafnia

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 1.25 times more return on investment than Hafnia. However, Harmony Gold is 1.25 times more volatile than Hafnia Limited. It trades about 0.05 of its potential returns per unit of risk. Hafnia Limited is currently generating about -0.08 per unit of risk. If you would invest  835.00  in Harmony Gold Mining on September 26, 2024 and sell it today you would earn a total of  115.00  from holding Harmony Gold Mining or generate 13.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.4%
Values	Daily Returns

Harmony Gold Mining  vs.  Hafnia 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 latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Hafnia Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hafnia Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Harmony Gold and Hafnia

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

The idea behind Harmony Gold Mining and Hafnia 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.