Correlation Between Harmony Gold and 191216DE7

Can any of the company-specific risk be diversified away by investing in both Harmony Gold and 191216DE7 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 191216DE7 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 COCA COLA CO, you can compare the effects of market volatilities on Harmony Gold and 191216DE7 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 191216DE7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and 191216DE7.

Diversification Opportunities for Harmony Gold and 191216DE7

0.21

Correlation Coefficient

Harmony Gold  191216DE7

Modest diversification

The 3 months correlation between Harmony and 191216DE7 is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO 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 191216DE7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of Harmony Gold i.e., Harmony Gold and 191216DE7 go up and down completely randomly.

Pair Corralation between Harmony Gold and 191216DE7

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 6.55 times more return on investment than 191216DE7. However, Harmony Gold is 6.55 times more volatile than COCA COLA CO. It trades about 0.19 of its potential returns per unit of risk. COCA COLA CO is currently generating about -0.02 per unit of risk. If you would invest  827.00  in Harmony Gold Mining on December 25, 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 Together
Strength	Very Weak
Accuracy	83.61%
Values	Daily Returns

Harmony Gold Mining  vs.  COCA COLA CO

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 unsteady fundamental indicators, Harmony Gold reported solid returns over the last few months and may actually be approaching a breakup point.

COCA A CO

Risk-Adjusted Performance

Very Weak

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216DE7 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harmony Gold and 191216DE7

The main advantage of trading using opposite Harmony Gold and 191216DE7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, 191216DE7 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 191216DE7 will offset losses from the drop in 191216DE7's long position.

The idea behind Harmony Gold Mining and COCA COLA CO 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 Anywhere module to track or share privately all of your investments from the convenience of any device.