Correlation Between Highway Holdings and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Harmony Gold 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 Highway Holdings and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highway Holdings Limited and Harmony Gold Mining, you can compare the effects of market volatilities on Highway Holdings and Harmony Gold 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 Highway Holdings with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Harmony Gold.
Diversification Opportunities for Highway Holdings and Harmony Gold
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Highway and Harmony is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining and Highway Holdings 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 Highway Holdings Limited are associated (or correlated) with Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Highway Holdings i.e., Highway Holdings and Harmony Gold go up and down completely randomly.
Pair Corralation between Highway Holdings and Harmony Gold
Given the investment horizon of 90 days Highway Holdings is expected to generate 1.55 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Highway Holdings Limited is 3.37 times less risky than Harmony Gold. It trades about 0.04 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 950.00 in Harmony Gold Mining on October 20, 2024 and sell it today you would lose (1.00) from holding Harmony Gold Mining or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Highway Holdings Limited vs. Harmony Gold Mining
Performance |
| Timeline |
| Highway Holdings |
| Harmony Gold Mining |
Highway Holdings and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Harmony Gold
The main advantage of trading using opposite Highway Holdings and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| Highway Holdings vs. Deswell Industries | Highway Holdings vs. Euro Tech Holdings | Highway Holdings vs. China Natural Resources | Highway Holdings vs. Arts Way Manufacturing Co |
| Harmony Gold vs. Marimaca Copper Corp | Harmony Gold vs. Sea | Harmony Gold vs. Cardinal Health | Harmony Gold vs. Zijin Mining Group |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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