Correlation Between Harmony Gold and MHP Hotel

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

Diversification Opportunities for Harmony Gold and MHP Hotel

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Harmony and MHP is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and MHP Hotel AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MHP Hotel AG 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 MHP Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MHP Hotel AG has no effect on the direction of Harmony Gold i.e., Harmony Gold and MHP Hotel go up and down completely randomly.

Pair Corralation between Harmony Gold and MHP Hotel

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 1.0 times more return on investment than MHP Hotel. However, Harmony Gold Mining is 1.0 times less risky than MHP Hotel. It trades about 0.48 of its potential returns per unit of risk. MHP Hotel AG is currently generating about 0.03 per unit of risk. If you would invest  780.00  in Harmony Gold Mining on October 30, 2024 and sell it today you would earn a total of  210.00  from holding Harmony Gold Mining or generate 26.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Harmony Gold Mining  vs.  MHP Hotel AG

 Performance 
       Timeline  
Harmony Gold Mining 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
MHP Hotel AG 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in MHP Hotel AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, MHP Hotel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Harmony Gold and MHP Hotel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Harmony Gold and MHP Hotel

The main advantage of trading using opposite Harmony Gold and MHP Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, MHP Hotel 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 MHP Hotel will offset losses from the drop in MHP Hotel's long position.
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The idea behind Harmony Gold Mining and MHP Hotel AG 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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