Correlation Between Harmony Gold and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Norwegian Air 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 Norwegian Air 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 Norwegian Air Shuttle, you can compare the effects of market volatilities on Harmony Gold and Norwegian Air 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 Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Norwegian Air.
Diversification Opportunities for Harmony Gold and Norwegian Air
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Harmony and Norwegian is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Norwegian Air Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Air Shuttle 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 Norwegian Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Air Shuttle has no effect on the direction of Harmony Gold i.e., Harmony Gold and Norwegian Air go up and down completely randomly.
Pair Corralation between Harmony Gold and Norwegian Air
Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the Norwegian Air. In addition to that, Harmony Gold is 1.12 times more volatile than Norwegian Air Shuttle. It trades about -0.17 of its total potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.18 per unit of volatility. If you would invest 87.00 in Norwegian Air Shuttle on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Norwegian Air Shuttle or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Harmony Gold Mining |
| Norwegian Air Shuttle |
Harmony Gold and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Norwegian Air
The main advantage of trading using opposite Harmony Gold and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Norwegian Air 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 Norwegian Air will offset losses from the drop in Norwegian Air's long position.| Harmony Gold vs. ZIJIN MINH UNSPADR20 | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. NMI Holdings | Harmony Gold vs. Origin Agritech |
| Norwegian Air vs. NTG Nordic Transport | Norwegian Air vs. MINCO SILVER | Norwegian Air vs. Ming Le Sports | Norwegian Air vs. Sporttotal AG |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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