Correlation Between New Providence and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both New Providence 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 New Providence and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Providence Acquisition and Harmony Gold Mining, you can compare the effects of market volatilities on New Providence 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 New Providence with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Providence and Harmony Gold.
Diversification Opportunities for New Providence and Harmony Gold
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Harmony is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding New Providence Acquisition 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 New Providence 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 New Providence Acquisition 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 New Providence i.e., New Providence and Harmony Gold go up and down completely randomly.
Pair Corralation between New Providence and Harmony Gold
Assuming the 90 days horizon New Providence is expected to generate 7.06 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, New Providence Acquisition is 1.74 times less risky than Harmony Gold. It trades about 0.03 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 391.00 in Harmony Gold Mining on September 12, 2024 and sell it today you would earn a total of 559.00 from holding Harmony Gold Mining or generate 142.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 57.23% |
| Values | Daily Returns |
New Providence Acquisition vs. Harmony Gold Mining
Performance |
| Timeline |
| New Providence Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Harmony Gold Mining |
New Providence and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Providence and Harmony Gold
The main advantage of trading using opposite New Providence and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Providence 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.| New Providence vs. Harmony Gold Mining | New Providence vs. Aegon NV ADR | New Providence vs. Fidus Investment Corp | New Providence vs. Precision Drilling |
| Harmony Gold vs. Revival Gold | Harmony Gold vs. Galiano Gold | Harmony Gold vs. US Gold Corp | Harmony Gold 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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