Correlation Between Wizz Air and Harmony Gold

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

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

Diversification Opportunities for Wizz Air and Harmony Gold

0.39

Correlation Coefficient

Wizz Air  Harmony Gold

Weak diversification

The 3 months correlation between Wizz and Harmony is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings 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 Wizz Air 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 Wizz Air Holdings 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 Wizz Air i.e., Wizz Air and Harmony Gold go up and down completely randomly.

Pair Corralation between Wizz Air and Harmony Gold

Assuming the 90 days trading horizon Wizz Air Holdings is expected to generate 0.97 times more return on investment than Harmony Gold. However, Wizz Air Holdings is 1.03 times less risky than Harmony Gold. It trades about 0.01 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.0 per unit of risk. If you would invest  1,573  in Wizz Air Holdings on August 30, 2024 and sell it today you would lose (25.00) from holding Wizz Air Holdings or give up 1.59% of portfolio value over 90 days.

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

Wizz Air Holdings  vs.  Harmony Gold Mining

Wizz Air Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wizz Air Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Wizz Air is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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. Despite nearly stable basic indicators, Harmony Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wizz Air and Harmony Gold

The main advantage of trading using opposite Wizz Air and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wizz Air 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 Wizz Air Holdings 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.