Correlation Between SPARTAN STORES and Harmony Gold

Can any of the company-specific risk be diversified away by investing in both SPARTAN STORES and Harmony Gold 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 SPARTAN STORES and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPARTAN STORES and Harmony Gold Mining, you can compare the effects of market volatilities on SPARTAN STORES and Harmony Gold 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 SPARTAN STORES with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPARTAN STORES and Harmony Gold.

Diversification Opportunities for SPARTAN STORES and Harmony Gold

0.41

Correlation Coefficient

SPARTAN STORES  Harmony Gold

Very weak diversification

The 3 months correlation between SPARTAN and Harmony is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining and SPARTAN STORES 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 SPARTAN STORES are associated (or correlated) with Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of SPARTAN STORES i.e., SPARTAN STORES and Harmony Gold go up and down completely randomly.

Pair Corralation between SPARTAN STORES and Harmony Gold

Assuming the 90 days trading horizon SPARTAN STORES is expected to generate 5.88 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, SPARTAN STORES is 1.42 times less risky than Harmony Gold. It trades about 0.07 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  780.00  in Harmony Gold Mining on December 29, 2024 and sell it today you would earn a total of  520.00  from holding Harmony Gold Mining or generate 66.67% return on investment over 90 days.

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

SPARTAN STORES  vs.  Harmony Gold Mining

SPARTAN STORES

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPARTAN STORES are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking indicators, SPARTAN STORES may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Harmony Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPARTAN STORES and Harmony Gold

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

The idea behind SPARTAN STORES and Harmony Gold Mining 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.