Correlation Between Harmony Gold and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Solstad Offshore 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 Solstad Offshore 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 Solstad Offshore ASA, you can compare the effects of market volatilities on Harmony Gold and Solstad Offshore 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 Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Solstad Offshore.
Diversification Opportunities for Harmony Gold and Solstad Offshore
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harmony and Solstad is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA 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 Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of Harmony Gold i.e., Harmony Gold and Solstad Offshore go up and down completely randomly.
Pair Corralation between Harmony Gold and Solstad Offshore
Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the Solstad Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Harmony Gold Mining is 1.71 times less risky than Solstad Offshore. The stock trades about -0.17 of its potential returns per unit of risk. The Solstad Offshore ASA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 278.00 in Solstad Offshore ASA on September 1, 2024 and sell it today you would earn a total of 71.00 from holding Solstad Offshore ASA or generate 25.54% 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. Solstad Offshore ASA
Performance |
| Timeline |
| Harmony Gold Mining |
| Solstad Offshore ASA |
Harmony Gold and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Solstad Offshore
The main advantage of trading using opposite Harmony Gold and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Solstad Offshore 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 Solstad Offshore will offset losses from the drop in Solstad Offshore'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 |
| Solstad Offshore vs. Tradeweb Markets | Solstad Offshore vs. National Retail Properties | Solstad Offshore vs. Zoom Video Communications | Solstad Offshore vs. Auto Trader Group |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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