Correlation Between Harmony Gold and Western Asset

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

Diversification Opportunities for Harmony Gold and Western Asset

0.15

Correlation Coefficient

Harmony Gold  Western Asset

Average diversification

The 3 months correlation between Harmony and Western is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Western Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Investment has no effect on the direction of Harmony Gold i.e., Harmony Gold and Western Asset go up and down completely randomly.

Pair Corralation between Harmony Gold and Western Asset

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 7.15 times more return on investment than Western Asset. However, Harmony Gold is 7.15 times more volatile than Western Asset Investment. It trades about 0.07 of its potential returns per unit of risk. Western Asset Investment is currently generating about 0.0 per unit of risk. If you would invest  589.00  in Harmony Gold Mining on October 6, 2024 and sell it today you would earn a total of  238.00  from holding Harmony Gold Mining or generate 40.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	76.21%
Values	Daily Returns

Harmony Gold Mining  vs.  Western Asset Investment

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 uncertain performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Western Asset Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Western Asset is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Harmony Gold and Western Asset

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

The idea behind Harmony Gold Mining and Western Asset Investment 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .