Correlation Between Harmony Gold and NIKE
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and NIKE 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 NIKE 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 NIKE Inc, you can compare the effects of market volatilities on Harmony Gold and NIKE 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 NIKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and NIKE.
Diversification Opportunities for Harmony Gold and NIKE
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harmony and NIKE is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and NIKE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc 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 NIKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIKE Inc has no effect on the direction of Harmony Gold i.e., Harmony Gold and NIKE go up and down completely randomly.
Pair Corralation between Harmony Gold and NIKE
Assuming the 90 days trading horizon Harmony Gold Mining is expected to under-perform the NIKE. In addition to that, Harmony Gold is 1.49 times more volatile than NIKE Inc. It trades about -0.1 of its total potential returns per unit of risk. NIKE Inc is currently generating about 0.23 per unit of volatility. If you would invest 688,000 in NIKE Inc on September 19, 2024 and sell it today you would earn a total of 62,000 from holding NIKE Inc or generate 9.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. NIKE Inc
Performance |
| Timeline |
| Harmony Gold Mining |
| NIKE Inc |
Harmony Gold and NIKE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and NIKE
The main advantage of trading using opposite Harmony Gold and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, NIKE 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 NIKE will offset losses from the drop in NIKE's long position.| Harmony Gold vs. Telecom Argentina | Harmony Gold vs. Agrometal SAI | Harmony Gold vs. Transportadora de Gas | Harmony Gold vs. Compania de Transporte |
| NIKE vs. Compania de Transporte | NIKE vs. Transportadora de Gas | NIKE vs. Harmony Gold Mining | NIKE vs. Agrometal SAI |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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