Correlation Between Harmony Gold and NioCorp Developments
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and NioCorp Developments 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 NioCorp Developments 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 NioCorp Developments Ltd, you can compare the effects of market volatilities on Harmony Gold and NioCorp Developments 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 NioCorp Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and NioCorp Developments.
Diversification Opportunities for Harmony Gold and NioCorp Developments
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Harmony and NioCorp is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and NioCorp Developments Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NioCorp Developments 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 NioCorp Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NioCorp Developments has no effect on the direction of Harmony Gold i.e., Harmony Gold and NioCorp Developments go up and down completely randomly.
Pair Corralation between Harmony Gold and NioCorp Developments
Assuming the 90 days horizon Harmony Gold is expected to generate 2.33 times less return on investment than NioCorp Developments. But when comparing it to its historical volatility, Harmony Gold Mining is 6.33 times less risky than NioCorp Developments. It trades about 0.1 of its potential returns per unit of risk. NioCorp Developments Ltd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 81.00 in NioCorp Developments Ltd on August 27, 2024 and sell it today you would earn a total of 58.00 from holding NioCorp Developments Ltd or generate 71.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.52% |
| Values | Daily Returns |
Harmony Gold Mining vs. NioCorp Developments Ltd
Performance |
| Timeline |
| Harmony Gold Mining |
| NioCorp Developments |
Harmony Gold and NioCorp Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and NioCorp Developments
The main advantage of trading using opposite Harmony Gold and NioCorp Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, NioCorp Developments 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 NioCorp Developments will offset losses from the drop in NioCorp Developments' long position.| Harmony Gold vs. Neogen | Harmony Gold vs. Merit Medical Systems | Harmony Gold vs. Omni Health | Harmony Gold vs. Hurco Companies |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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