Correlation Between Harmony Gold and Hertz Global

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

Diversification Opportunities for Harmony Gold and Hertz Global

-0.48

Correlation Coefficient

Harmony Gold  Hertz Global

Very good diversification

The 3 months correlation between Harmony and Hertz is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Hertz Global Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Hldgs 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 Hertz Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hertz Global Hldgs has no effect on the direction of Harmony Gold i.e., Harmony Gold and Hertz Global go up and down completely randomly.

Pair Corralation between Harmony Gold and Hertz Global

Considering the 90-day investment horizon Harmony Gold Mining is expected to generate 0.85 times more return on investment than Hertz Global. However, Harmony Gold Mining is 1.18 times less risky than Hertz Global. It trades about 0.07 of its potential returns per unit of risk. Hertz Global Hldgs is currently generating about -0.05 per unit of risk. If you would invest  375.00  in Harmony Gold Mining on October 11, 2024 and sell it today you would earn a total of  486.00  from holding Harmony Gold Mining or generate 129.6% return on investment over 90 days.

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

Harmony Gold Mining  vs.  Hertz Global Hldgs

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 latest uncertain performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hertz Global Hldgs

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Hldgs are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hertz Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harmony Gold and Hertz Global

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

The idea behind Harmony Gold Mining and Hertz Global Hldgs 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.