Correlation Between Harmony Gold and Headwater Gold
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Headwater 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 Harmony Gold and Headwater Gold 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 Headwater Gold, you can compare the effects of market volatilities on Harmony Gold and Headwater 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 Harmony Gold with a short position of Headwater Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Headwater Gold.
Diversification Opportunities for Harmony Gold and Headwater Gold
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Harmony and Headwater is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Headwater Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Headwater 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 Headwater Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Headwater Gold has no effect on the direction of Harmony Gold i.e., Harmony Gold and Headwater Gold go up and down completely randomly.
Pair Corralation between Harmony Gold and Headwater Gold
Considering the 90-day investment horizon Harmony Gold Mining is expected to under-perform the Headwater Gold. But the stock apears to be less risky and, when comparing its historical volatility, Harmony Gold Mining is 1.5 times less risky than Headwater Gold. The stock trades about -0.18 of its potential returns per unit of risk. The Headwater Gold is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Headwater Gold on September 3, 2024 and sell it today you would lose (2.00) from holding Headwater Gold or give up 11.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Headwater Gold
Performance |
| Timeline |
| Harmony Gold Mining |
| Headwater Gold |
Harmony Gold and Headwater Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Headwater Gold
The main advantage of trading using opposite Harmony Gold and Headwater Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Headwater 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 Headwater Gold will offset losses from the drop in Headwater Gold'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 |
| Headwater Gold vs. Harmony Gold Mining | Headwater Gold vs. SPACE | Headwater Gold vs. T Rowe Price | Headwater Gold 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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