Correlation Between Harmony Gold and TRAVELERS

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Can any of the company-specific risk be diversified away by investing in both Harmony Gold and TRAVELERS 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 TRAVELERS 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 TRAVELERS INS GROUP, you can compare the effects of market volatilities on Harmony Gold and TRAVELERS 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 TRAVELERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and TRAVELERS.

Diversification Opportunities for Harmony Gold and TRAVELERS

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Harmony and TRAVELERS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and TRAVELERS INS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVELERS INS GROUP 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 TRAVELERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVELERS INS GROUP has no effect on the direction of Harmony Gold i.e., Harmony Gold and TRAVELERS go up and down completely randomly.

Pair Corralation between Harmony Gold and TRAVELERS

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 4.82 times more return on investment than TRAVELERS. However, Harmony Gold is 4.82 times more volatile than TRAVELERS INS GROUP. It trades about 0.22 of its potential returns per unit of risk. TRAVELERS INS GROUP is currently generating about 0.15 per unit of risk. If you would invest  827.00  in Harmony Gold Mining on November 3, 2024 and sell it today you would earn a total of  122.00  from holding Harmony Gold Mining or generate 14.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.24%
ValuesDaily Returns

Harmony Gold Mining  vs.  TRAVELERS INS GROUP

 Performance 
       Timeline  
Harmony Gold Mining 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Harmony Gold Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
TRAVELERS INS GROUP 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in TRAVELERS INS GROUP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, TRAVELERS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Harmony Gold and TRAVELERS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Harmony Gold and TRAVELERS

The main advantage of trading using opposite Harmony Gold and TRAVELERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, TRAVELERS 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 TRAVELERS will offset losses from the drop in TRAVELERS's long position.
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The idea behind Harmony Gold Mining and TRAVELERS INS GROUP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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