Correlation Between Harmony Gold and New World
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and New World 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 New World 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 New World Gold, you can compare the effects of market volatilities on Harmony Gold and New World 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 New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and New World.
Diversification Opportunities for Harmony Gold and New World
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Harmony and New is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and New World Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World 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 New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Gold has no effect on the direction of Harmony Gold i.e., Harmony Gold and New World go up and down completely randomly.
Pair Corralation between Harmony Gold and New World
Considering the 90-day investment horizon Harmony Gold Mining is expected to generate 0.14 times more return on investment than New World. However, Harmony Gold Mining is 7.16 times less risky than New World. It trades about 0.07 of its potential returns per unit of risk. New World Gold is currently generating about -0.22 per unit of risk. If you would invest 922.00 in Harmony Gold Mining on September 13, 2024 and sell it today you would earn a total of 34.00 from holding Harmony Gold Mining or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. New World Gold
Performance |
| Timeline |
| Harmony Gold Mining |
| New World Gold |
Harmony Gold and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and New World
The main advantage of trading using opposite Harmony Gold and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, New World 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 New World will offset losses from the drop in New World's long position.| Harmony Gold vs. Fortitude Gold Corp | Harmony Gold vs. New Gold | Harmony Gold vs. Galiano Gold | Harmony Gold vs. GoldMining |
| New World vs. Revival Gold | New World vs. Galiano Gold | New World vs. US Gold Corp | New World vs. HUMANA INC |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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