Correlation Between Harmony Gold and New Providence
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and New Providence 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 New Providence 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 New Providence Acquisition, you can compare the effects of market volatilities on Harmony Gold and New Providence 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 New Providence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and New Providence.
Diversification Opportunities for Harmony Gold and New Providence
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Harmony and New is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and New Providence Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Providence Acqui 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 New Providence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Providence Acqui has no effect on the direction of Harmony Gold i.e., Harmony Gold and New Providence go up and down completely randomly.
Pair Corralation between Harmony Gold and New Providence
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 2.61 times more return on investment than New Providence. However, Harmony Gold is 2.61 times more volatile than New Providence Acquisition. It trades about 0.1 of its potential returns per unit of risk. New Providence Acquisition is currently generating about 0.03 per unit of risk. If you would invest 202.00 in Harmony Gold Mining on September 13, 2024 and sell it today you would earn a total of 748.00 from holding Harmony Gold Mining or generate 370.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.14% |
| Values | Daily Returns |
Harmony Gold Mining vs. New Providence Acquisition
Performance |
| Timeline |
| Harmony Gold Mining |
| New Providence Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Harmony Gold and New Providence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and New Providence
The main advantage of trading using opposite Harmony Gold and New Providence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, New Providence 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 New Providence will offset losses from the drop in New Providence's long position.| Harmony Gold vs. Revival Gold | Harmony Gold vs. Galiano Gold | Harmony Gold vs. US Gold Corp | Harmony Gold vs. HUMANA INC |
| New Providence vs. Amgen Inc | New Providence vs. Cardinal Health | New Providence vs. Microbot Medical | New Providence vs. Tandem Diabetes Care |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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