Correlation Between Harmony Gold and Netcare
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Netcare 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 Netcare 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 Netcare, you can compare the effects of market volatilities on Harmony Gold and Netcare 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 Netcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Netcare.
Diversification Opportunities for Harmony Gold and Netcare
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Harmony and Netcare is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Netcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcare 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 Netcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcare has no effect on the direction of Harmony Gold i.e., Harmony Gold and Netcare go up and down completely randomly.
Pair Corralation between Harmony Gold and Netcare
Assuming the 90 days trading horizon Harmony Gold Mining is expected to generate 2.17 times more return on investment than Netcare. However, Harmony Gold is 2.17 times more volatile than Netcare. It trades about 0.08 of its potential returns per unit of risk. Netcare is currently generating about 0.02 per unit of risk. If you would invest 614,100 in Harmony Gold Mining on August 30, 2024 and sell it today you would earn a total of 1,074,900 from holding Harmony Gold Mining or generate 175.04% 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. Netcare
Performance |
| Timeline |
| Harmony Gold Mining |
| Netcare |
Harmony Gold and Netcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Netcare
The main advantage of trading using opposite Harmony Gold and Netcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Netcare 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 Netcare will offset losses from the drop in Netcare's long position.| Harmony Gold vs. RCL Foods | Harmony Gold vs. Deneb Investments | Harmony Gold vs. Safari Investments RSA | Harmony Gold vs. Allied Electronics |
| Netcare vs. Deneb Investments | Netcare vs. Harmony Gold Mining | Netcare vs. HomeChoice Investments | Netcare vs. Astoria Investments |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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