Correlation Between Naspers and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Naspers 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 Naspers and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naspers Limited and Harmony Gold Mining, you can compare the effects of market volatilities on Naspers 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 Naspers with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naspers and Harmony Gold.
Diversification Opportunities for Naspers and Harmony Gold
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Naspers and Harmony is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Naspers Limited 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 Naspers 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 Naspers Limited 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 Naspers i.e., Naspers and Harmony Gold go up and down completely randomly.
Pair Corralation between Naspers and Harmony Gold
Assuming the 90 days trading horizon Naspers is expected to generate 3.96 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Naspers Limited is 1.74 times less risky than Harmony Gold. It trades about 0.1 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,666,900 in Harmony Gold Mining on September 3, 2024 and sell it today you would earn a total of 210,500 from holding Harmony Gold Mining or generate 12.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 26.56% |
| Values | Daily Returns |
Naspers Limited vs. Harmony Gold Mining
Performance |
| Timeline |
| Naspers Limited |
| Harmony Gold Mining |
Naspers and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naspers and Harmony Gold
The main advantage of trading using opposite Naspers and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naspers 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.| Naspers vs. Prosus NV | Naspers vs. Sasol Ltd Bee | Naspers vs. Centaur Bci Balanced | Naspers vs. Sabvest Capital |
| Harmony Gold vs. Sibanye Stillwater | Harmony Gold vs. AngloGold Ashanti | Harmony Gold vs. DRDGOLD Limited | Harmony Gold vs. Pan African Resources |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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