Correlation Between Harmony Gold and Big Ridge
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Big Ridge 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 Big Ridge 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 Big Ridge Gold, you can compare the effects of market volatilities on Harmony Gold and Big Ridge 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 Big Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Big Ridge.
Diversification Opportunities for Harmony Gold and Big Ridge
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Harmony and Big is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Big Ridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Ridge Gold 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 Big Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Ridge Gold has no effect on the direction of Harmony Gold i.e., Harmony Gold and Big Ridge go up and down completely randomly.
Pair Corralation between Harmony Gold and Big Ridge
Considering the 90-day investment horizon Harmony Gold is expected to generate 19.44 times less return on investment than Big Ridge. But when comparing it to its historical volatility, Harmony Gold Mining is 2.22 times less risky than Big Ridge. It trades about 0.02 of its potential returns per unit of risk. Big Ridge Gold is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Big Ridge Gold on September 5, 2024 and sell it today you would earn a total of 4.00 from holding Big Ridge Gold or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.82% |
| Values | Daily Returns |
Harmony Gold Mining vs. Big Ridge Gold
Performance |
| Timeline |
| Harmony Gold Mining |
| Big Ridge Gold |
Harmony Gold and Big Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Big Ridge
The main advantage of trading using opposite Harmony Gold and Big Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Big Ridge 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 Big Ridge will offset losses from the drop in Big Ridge's long position.| Harmony Gold vs. AngloGold Ashanti plc | Harmony Gold vs. Eldorado Gold Corp | Harmony Gold vs. Kinross Gold | Harmony Gold vs. Pan American Silver |
| Big Ridge vs. Harmony Gold Mining | Big Ridge vs. SPACE | Big Ridge vs. T Rowe Price | Big Ridge vs. Ampleforth |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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