Correlation Between Harmony Gold and WILLIAMS

Can any of the company-specific risk be diversified away by investing in both Harmony Gold and WILLIAMS 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 WILLIAMS 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 WILLIAMS INC 75, you can compare the effects of market volatilities on Harmony Gold and WILLIAMS 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 WILLIAMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and WILLIAMS.

Diversification Opportunities for Harmony Gold and WILLIAMS

0.2

Correlation Coefficient

Harmony Gold  WILLIAMS

Modest diversification

The 3 months correlation between Harmony and WILLIAMS is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and WILLIAMS INC 75 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WILLIAMS INC 75 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 WILLIAMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WILLIAMS INC 75 has no effect on the direction of Harmony Gold i.e., Harmony Gold and WILLIAMS go up and down completely randomly.

Pair Corralation between Harmony Gold and WILLIAMS

Considering the 90-day investment horizon Harmony Gold Mining is expected to generate 6.21 times more return on investment than WILLIAMS. However, Harmony Gold is 6.21 times more volatile than WILLIAMS INC 75. It trades about 0.25 of its potential returns per unit of risk. WILLIAMS INC 75 is currently generating about 0.02 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  433.50  from holding Harmony Gold Mining or generate 52.17% return on investment over 90 days.

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

Harmony Gold Mining  vs.  WILLIAMS INC 75

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 19 (%) 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.

WILLIAMS INC 75

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WILLIAMS INC 75 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, WILLIAMS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harmony Gold and WILLIAMS

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

The idea behind Harmony Gold Mining and WILLIAMS INC 75 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.