Correlation Between Harmony Gold and FEDEX

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

Diversification Opportunities for Harmony Gold and FEDEX

0.02

Correlation Coefficient

Harmony Gold  FEDEX

Significant diversification

The 3 months correlation between Harmony and FEDEX is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and FEDEX P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEDEX P 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 FEDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEDEX P has no effect on the direction of Harmony Gold i.e., Harmony Gold and FEDEX go up and down completely randomly.

Pair Corralation between Harmony Gold and FEDEX

Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the FEDEX. In addition to that, Harmony Gold is 3.06 times more volatile than FEDEX P. It trades about -0.22 of its total potential returns per unit of risk. FEDEX P is currently generating about -0.1 per unit of volatility. If you would invest  9,706  in FEDEX P on September 15, 2024 and sell it today you would lose (313.00) from holding FEDEX P or give up 3.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Harmony Gold Mining  vs.  FEDEX P

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.

FEDEX P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEDEX P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for FEDEX P investors.

Pair Trading with Harmony Gold and FEDEX

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

The idea behind Harmony Gold Mining and FEDEX P 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.