Correlation Between Harmony Gold and Reinsurance Group

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

Diversification Opportunities for Harmony Gold and Reinsurance Group

-0.49

Correlation Coefficient

Harmony Gold  Reinsurance Group

Very good diversification

The 3 months correlation between Harmony and Reinsurance is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group 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 Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of Harmony Gold i.e., Harmony Gold and Reinsurance Group go up and down completely randomly.

Pair Corralation between Harmony Gold and Reinsurance Group

Considering the 90-day investment horizon Harmony Gold Mining is expected to generate 1.52 times more return on investment than Reinsurance Group. However, Harmony Gold is 1.52 times more volatile than Reinsurance Group of. It trades about 0.25 of its potential returns per unit of risk. Reinsurance Group of is currently generating about -0.1 per unit of risk. If you would invest  831.00  in Harmony Gold Mining on December 25, 2024 and sell it today you would earn a total of  442.00  from holding Harmony Gold Mining or generate 53.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Harmony Gold Mining  vs.  Reinsurance Group of

Harmony Gold Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Harmony Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Reinsurance Group

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Harmony Gold and Reinsurance Group

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

The idea behind Harmony Gold Mining and Reinsurance Group of 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.