Correlation Between Harmony Gold and Western Sierra
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Western Sierra 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 Western Sierra 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 Western Sierra Mining, you can compare the effects of market volatilities on Harmony Gold and Western Sierra 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 Western Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Western Sierra.
Diversification Opportunities for Harmony Gold and Western Sierra
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Harmony and Western is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Western Sierra Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Sierra Mining 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 Western Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Sierra Mining has no effect on the direction of Harmony Gold i.e., Harmony Gold and Western Sierra go up and down completely randomly.
Pair Corralation between Harmony Gold and Western Sierra
Assuming the 90 days horizon Harmony Gold is expected to generate 16.89 times less return on investment than Western Sierra. But when comparing it to its historical volatility, Harmony Gold Mining is 17.51 times less risky than Western Sierra. It trades about 0.1 of its potential returns per unit of risk. Western Sierra Mining is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 9.47 in Western Sierra Mining on August 30, 2024 and sell it today you would lose (8.79) from holding Western Sierra Mining or give up 92.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 65.45% |
| Values | Daily Returns |
Harmony Gold Mining vs. Western Sierra Mining
Performance |
| Timeline |
| Harmony Gold Mining |
| Western Sierra Mining |
Harmony Gold and Western Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Western Sierra
The main advantage of trading using opposite Harmony Gold and Western Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Western Sierra 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 Western Sierra will offset losses from the drop in Western Sierra's long position.| Harmony Gold vs. Vertiv Holdings Co | Harmony Gold vs. Nasdaq Inc | Harmony Gold vs. McDonalds | Harmony Gold vs. Walmart |
| Western Sierra vs. Green Cures Botanical | Western Sierra vs. Cann American Corp | Western Sierra vs. Rimrock Gold Corp | Western Sierra vs. Galexxy Holdings |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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