Correlation Between NioCorp Developments and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both NioCorp Developments 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 NioCorp Developments and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NioCorp Developments Ltd and Harmony Gold Mining, you can compare the effects of market volatilities on NioCorp Developments 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 NioCorp Developments with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Harmony Gold.
Diversification Opportunities for NioCorp Developments and Harmony Gold
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NioCorp and Harmony is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd 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 NioCorp Developments 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 NioCorp Developments Ltd 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 NioCorp Developments i.e., NioCorp Developments and Harmony Gold go up and down completely randomly.
Pair Corralation between NioCorp Developments and Harmony Gold
Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the Harmony Gold. In addition to that, NioCorp Developments is 1.35 times more volatile than Harmony Gold Mining. It trades about -0.05 of its total potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.08 per unit of volatility. If you would invest 452.00 in Harmony Gold Mining on August 27, 2024 and sell it today you would earn a total of 511.00 from holding Harmony Gold Mining or generate 113.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NioCorp Developments Ltd vs. Harmony Gold Mining
Performance |
| Timeline |
| NioCorp Developments |
| Harmony Gold Mining |
NioCorp Developments and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NioCorp Developments and Harmony Gold
The main advantage of trading using opposite NioCorp Developments and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments 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.| NioCorp Developments vs. Vale SA ADR | NioCorp Developments vs. Teck Resources Ltd | NioCorp Developments vs. BHP Group Limited | NioCorp Developments vs. Glencore PLC ADR |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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