Correlation Between Harmony Gold and Gold Springs
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Gold Springs 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 Gold Springs 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 Gold Springs Resource, you can compare the effects of market volatilities on Harmony Gold and Gold Springs 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 Gold Springs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Gold Springs.
Diversification Opportunities for Harmony Gold and Gold Springs
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Harmony and Gold is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Gold Springs Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Springs Resource 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 Gold Springs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Springs Resource has no effect on the direction of Harmony Gold i.e., Harmony Gold and Gold Springs go up and down completely randomly.
Pair Corralation between Harmony Gold and Gold Springs
Considering the 90-day investment horizon Harmony Gold Mining is expected to generate 0.59 times more return on investment than Gold Springs. However, Harmony Gold Mining is 1.68 times less risky than Gold Springs. It trades about -0.21 of its potential returns per unit of risk. Gold Springs Resource is currently generating about -0.17 per unit of risk. If you would invest 1,055 in Harmony Gold Mining on September 4, 2024 and sell it today you would lose (163.00) from holding Harmony Gold Mining or give up 15.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Gold Springs Resource
Performance |
| Timeline |
| Harmony Gold Mining |
| Gold Springs Resource |
Harmony Gold and Gold Springs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Gold Springs
The main advantage of trading using opposite Harmony Gold and Gold Springs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Gold Springs 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 Gold Springs will offset losses from the drop in Gold Springs' 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 |
| Gold Springs vs. Harmony Gold Mining | Gold Springs vs. SPACE | Gold Springs vs. T Rowe Price | Gold Springs 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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