Correlation Between Harmony Gold and Old Mutual
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Old Mutual 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 Old Mutual 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 Old Mutual, you can compare the effects of market volatilities on Harmony Gold and Old Mutual 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 Old Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Old Mutual.
Diversification Opportunities for Harmony Gold and Old Mutual
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Harmony and Old is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Old Mutual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Mutual 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 Old Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Mutual has no effect on the direction of Harmony Gold i.e., Harmony Gold and Old Mutual go up and down completely randomly.
Pair Corralation between Harmony Gold and Old Mutual
Assuming the 90 days trading horizon Harmony Gold Mining is expected to generate 2.01 times more return on investment than Old Mutual. However, Harmony Gold is 2.01 times more volatile than Old Mutual. It trades about 0.09 of its potential returns per unit of risk. Old Mutual is currently generating about 0.06 per unit of risk. If you would invest 589,700 in Harmony Gold Mining on September 12, 2024 and sell it today you would earn a total of 1,099,600 from holding Harmony Gold Mining or generate 186.47% 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. Old Mutual
Performance |
| Timeline |
| Harmony Gold Mining |
| Old Mutual |
Harmony Gold and Old Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Old Mutual
The main advantage of trading using opposite Harmony Gold and Old Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Old Mutual 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 Old Mutual will offset losses from the drop in Old Mutual's long position.| Harmony Gold vs. Frontier Transport Holdings | Harmony Gold vs. British American Tobacco | Harmony Gold vs. Master Drilling Group | Harmony Gold vs. MC Mining |
| Old Mutual vs. E Media Holdings | Old Mutual vs. Harmony Gold Mining | Old Mutual vs. Astral Foods | Old Mutual vs. Deneb 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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