Correlation Between Harmony Gold and Harley Davidson

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

Diversification Opportunities for Harmony Gold and Harley Davidson

0.5

Correlation Coefficient

Harmony Gold  Harley Davidson

Very weak diversification

The 3 months correlation between Harmony and Harley is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Harley Davidson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harley Davidson 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 Harley Davidson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harley Davidson has no effect on the direction of Harmony Gold i.e., Harmony Gold and Harley Davidson go up and down completely randomly.

Pair Corralation between Harmony Gold and Harley Davidson

Considering the 90-day investment horizon Harmony Gold Mining is expected to generate 1.5 times more return on investment than Harley Davidson. However, Harmony Gold is 1.5 times more volatile than Harley Davidson. It trades about 0.07 of its potential returns per unit of risk. Harley Davidson is currently generating about -0.03 per unit of risk. If you would invest  347.00  in Harmony Gold Mining on September 29, 2024 and sell it today you would earn a total of  477.00  from holding Harmony Gold Mining or generate 137.46% return on investment over 90 days.

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

Harmony Gold Mining  vs.  Harley Davidson

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. In spite of uncertain performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Harley Davidson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harley Davidson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Harmony Gold and Harley Davidson

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

The idea behind Harmony Gold Mining and Harley Davidson 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.