Correlation Between Harmony Gold and National Healthcare

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

Diversification Opportunities for Harmony Gold and National Healthcare

-0.42

Correlation Coefficient

Harmony Gold  National Healthcare

Very good diversification

The 3 months correlation between Harmony and National is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and National Healthcare Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Healthcare 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 National Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Healthcare has no effect on the direction of Harmony Gold i.e., Harmony Gold and National Healthcare go up and down completely randomly.

Pair Corralation between Harmony Gold and National Healthcare

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 3.56 times more return on investment than National Healthcare. However, Harmony Gold is 3.56 times more volatile than National Healthcare Properties,. It trades about 0.2 of its potential returns per unit of risk. National Healthcare Properties, is currently generating about 0.07 per unit of risk. If you would invest  827.00  in Harmony Gold Mining on December 20, 2024 and sell it today you would earn a total of  373.00  from holding Harmony Gold Mining or generate 45.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.0%
Values	Daily Returns

Harmony Gold Mining  vs.  National Healthcare Properties

Harmony Gold Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, Harmony Gold reported solid returns over the last few months and may actually be approaching a breakup point.

National Healthcare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Healthcare Properties, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, National Healthcare is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Harmony Gold and National Healthcare

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

The idea behind Harmony Gold Mining and National Healthcare Properties, 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.