Correlation Between Harmony Gold and Gold Road
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Gold Road 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 Gold Road 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 Gold Road Resources, you can compare the effects of market volatilities on Harmony Gold and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Gold Road.
Diversification Opportunities for Harmony Gold and Gold Road
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Harmony and Gold is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Harmony Gold i.e., Harmony Gold and Gold Road go up and down completely randomly.
Pair Corralation between Harmony Gold and Gold Road
Assuming the 90 days horizon Harmony Gold is expected to generate 8.15 times less return on investment than Gold Road. In addition to that, Harmony Gold is 1.1 times more volatile than Gold Road Resources. It trades about 0.04 of its total potential returns per unit of risk. Gold Road Resources is currently generating about 0.37 per unit of volatility. If you would invest 106.00 in Gold Road Resources on September 13, 2024 and sell it today you would earn a total of 24.00 from holding Gold Road Resources or generate 22.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Gold Road Resources
Performance |
| Timeline |
| Harmony Gold Mining |
| Gold Road Resources |
Harmony Gold and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Gold Road
The main advantage of trading using opposite Harmony Gold and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Harmony Gold vs. Franco Nevada | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. SIVERS SEMICONDUCTORS AB | Harmony Gold vs. Norsk Hydro ASA |
| Gold Road vs. Franco Nevada | Gold Road vs. Superior Plus Corp | Gold Road vs. SIVERS SEMICONDUCTORS AB | Gold Road vs. Norsk Hydro ASA |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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