Correlation Between Harmony Gold and ISS A/S

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

Diversification Opportunities for Harmony Gold and ISS A/S

-0.08

Correlation Coefficient

Harmony Gold  ISS A/S

Good diversification

The 3 months correlation between Harmony and ISS is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and ISS AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISS A/S 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 ISS A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISS A/S has no effect on the direction of Harmony Gold i.e., Harmony Gold and ISS A/S go up and down completely randomly.

Pair Corralation between Harmony Gold and ISS A/S

Considering the 90-day investment horizon Harmony Gold Mining is expected to generate 0.89 times more return on investment than ISS A/S. However, Harmony Gold Mining is 1.12 times less risky than ISS A/S. It trades about 0.61 of its potential returns per unit of risk. ISS AS is currently generating about -0.22 per unit of risk. If you would invest  831.00  in Harmony Gold Mining on October 26, 2024 and sell it today you would earn a total of  255.50  from holding Harmony Gold Mining or generate 30.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Harmony Gold Mining  vs.  ISS AS

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 fairly strong primary indicators, Harmony Gold is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

ISS A/S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ISS AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Harmony Gold and ISS A/S

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

The idea behind Harmony Gold Mining and ISS AS 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.