Correlation Between Harmony Gold and DRDGOLD Limited
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and DRDGOLD Limited 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 DRDGOLD Limited 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 DRDGOLD Limited ADR, you can compare the effects of market volatilities on Harmony Gold and DRDGOLD Limited 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 DRDGOLD Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and DRDGOLD Limited.
Diversification Opportunities for Harmony Gold and DRDGOLD Limited
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Harmony and DRDGOLD is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and DRDGOLD Limited ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRDGOLD Limited ADR 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 DRDGOLD Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRDGOLD Limited ADR has no effect on the direction of Harmony Gold i.e., Harmony Gold and DRDGOLD Limited go up and down completely randomly.
Pair Corralation between Harmony Gold and DRDGOLD Limited
Considering the 90-day investment horizon Harmony Gold Mining is expected to generate 0.75 times more return on investment than DRDGOLD Limited. However, Harmony Gold Mining is 1.33 times less risky than DRDGOLD Limited. It trades about 0.72 of its potential returns per unit of risk. DRDGOLD Limited ADR is currently generating about 0.34 per unit of risk. If you would invest 861.00 in Harmony Gold Mining on November 9, 2024 and sell it today you would earn a total of 353.00 from holding Harmony Gold Mining or generate 41.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. DRDGOLD Limited ADR
Performance |
| Timeline |
| Harmony Gold Mining |
| DRDGOLD Limited ADR |
Harmony Gold and DRDGOLD Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and DRDGOLD Limited
The main advantage of trading using opposite Harmony Gold and DRDGOLD Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, DRDGOLD Limited 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 DRDGOLD Limited will offset losses from the drop in DRDGOLD Limited'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 |
| DRDGOLD Limited vs. Osisko Gold Ro | DRDGOLD Limited vs. Eldorado Gold Corp | DRDGOLD Limited vs. SSR Mining | DRDGOLD Limited vs. Idaho Strategic Resources |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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