Correlation Between Harmony Gold and ALLSTATE

Can any of the company-specific risk be diversified away by investing in both Harmony Gold and ALLSTATE 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 ALLSTATE 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 ALLSTATE P 555, you can compare the effects of market volatilities on Harmony Gold and ALLSTATE 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 ALLSTATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and ALLSTATE.

Diversification Opportunities for Harmony Gold and ALLSTATE

0.16

Correlation Coefficient

Harmony Gold  ALLSTATE

Average diversification

The 3 months correlation between Harmony and ALLSTATE is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and ALLSTATE P 555 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLSTATE P 555 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 ALLSTATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLSTATE P 555 has no effect on the direction of Harmony Gold i.e., Harmony Gold and ALLSTATE go up and down completely randomly.

Pair Corralation between Harmony Gold and ALLSTATE

Considering the 90-day investment horizon Harmony Gold Mining is expected to under-perform the ALLSTATE. In addition to that, Harmony Gold is 2.61 times more volatile than ALLSTATE P 555. It trades about -0.07 of its total potential returns per unit of risk. ALLSTATE P 555 is currently generating about -0.01 per unit of volatility. If you would invest  10,401  in ALLSTATE P 555 on October 10, 2024 and sell it today you would lose (116.00) from holding ALLSTATE P 555 or give up 1.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	87.1%
Values	Daily Returns

Harmony Gold Mining  vs.  ALLSTATE P 555

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ALLSTATE P 555

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLSTATE P 555 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLSTATE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harmony Gold and ALLSTATE

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

The idea behind Harmony Gold Mining and ALLSTATE P 555 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.