Correlation Between Harmony Gold and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and PennantPark Investment 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 PennantPark Investment 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 PennantPark Investment, you can compare the effects of market volatilities on Harmony Gold and PennantPark Investment 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 PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and PennantPark Investment.
Diversification Opportunities for Harmony Gold and PennantPark Investment
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Harmony and PennantPark is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment 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 PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of Harmony Gold i.e., Harmony Gold and PennantPark Investment go up and down completely randomly.
Pair Corralation between Harmony Gold and PennantPark Investment
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 2.39 times more return on investment than PennantPark Investment. However, Harmony Gold is 2.39 times more volatile than PennantPark Investment. It trades about 0.04 of its potential returns per unit of risk. PennantPark Investment is currently generating about -0.02 per unit of risk. If you would invest 880.00 in Harmony Gold Mining on September 1, 2024 and sell it today you would earn a total of 70.00 from holding Harmony Gold Mining or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Harmony Gold Mining vs. PennantPark Investment
Performance |
| Timeline |
| Harmony Gold Mining |
| PennantPark Investment |
Harmony Gold and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and PennantPark Investment
The main advantage of trading using opposite Harmony Gold and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.| Harmony Gold vs. Aurion Resources | Harmony Gold vs. Rio2 Limited | Harmony Gold vs. Palamina Corp | Harmony Gold vs. BTU Metals Corp |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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