Correlation Between Headwater Gold and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Headwater Gold and Harmony 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 Headwater Gold and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Headwater Gold and Harmony Gold Mining, you can compare the effects of market volatilities on Headwater Gold and Harmony 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 Headwater Gold with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Headwater Gold and Harmony Gold.
Diversification Opportunities for Headwater Gold and Harmony Gold
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Headwater and Harmony is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Headwater Gold and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining and Headwater 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 Headwater Gold are associated (or correlated) with Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Headwater Gold i.e., Headwater Gold and Harmony Gold go up and down completely randomly.
Pair Corralation between Headwater Gold and Harmony Gold
Assuming the 90 days horizon Headwater Gold is expected to generate 1.45 times more return on investment than Harmony Gold. However, Headwater Gold is 1.45 times more volatile than Harmony Gold Mining. It trades about -0.09 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.22 per unit of risk. If you would invest 17.00 in Headwater Gold on September 4, 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 | 95.24% |
| Values | Daily Returns |
Headwater Gold vs. Harmony Gold Mining
Performance |
| Timeline |
| Headwater Gold |
| Harmony Gold Mining |
Headwater Gold and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Headwater Gold and Harmony Gold
The main advantage of trading using opposite Headwater Gold and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Headwater Gold position performs unexpectedly, Harmony 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| Headwater Gold vs. Harmony Gold Mining | Headwater Gold vs. SPACE | Headwater Gold vs. T Rowe Price | Headwater Gold vs. Ampleforth |
| Harmony Gold vs. AngloGold Ashanti plc | Harmony Gold vs. Eldorado Gold Corp | Harmony Gold vs. Kinross Gold | Harmony Gold vs. Pan American Silver |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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