Correlation Between Harmony Gold and PFIZER

Can any of the company-specific risk be diversified away by investing in both Harmony Gold and PFIZER 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 PFIZER 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 PFIZER INC 43, you can compare the effects of market volatilities on Harmony Gold and PFIZER 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 PFIZER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and PFIZER.

Diversification Opportunities for Harmony Gold and PFIZER

-0.16

Correlation Coefficient

Harmony Gold  PFIZER

Good diversification

The 3 months correlation between Harmony and PFIZER is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and PFIZER INC 43 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC 43 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 PFIZER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PFIZER INC 43 has no effect on the direction of Harmony Gold i.e., Harmony Gold and PFIZER go up and down completely randomly.

Pair Corralation between Harmony Gold and PFIZER

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 5.18 times more return on investment than PFIZER. However, Harmony Gold is 5.18 times more volatile than PFIZER INC 43. It trades about 0.11 of its potential returns per unit of risk. PFIZER INC 43 is currently generating about 0.04 per unit of risk. If you would invest  450.00  in Harmony Gold Mining on September 24, 2024 and sell it today you would earn a total of  500.00  from holding Harmony Gold Mining or generate 111.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.18%
Values	Daily Returns

Harmony Gold Mining  vs.  PFIZER INC 43

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

PFIZER INC 43

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PFIZER INC 43 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PFIZER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harmony Gold and PFIZER

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

The idea behind Harmony Gold Mining and PFIZER INC 43 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..