Correlation Between New World and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both New World 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 World 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 World Gold and Harmony Gold Mining, you can compare the effects of market volatilities on New World 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 World with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Harmony Gold.
Diversification Opportunities for New World and Harmony Gold
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Harmony is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding New World 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 New World 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 World 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 New World i.e., New World and Harmony Gold go up and down completely randomly.
Pair Corralation between New World and Harmony Gold
Given the investment horizon of 90 days New World Gold is expected to generate 27.29 times more return on investment than Harmony Gold. However, New World is 27.29 times more volatile than Harmony Gold Mining. It trades about 0.12 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.08 per unit of risk. If you would invest 0.01 in New World Gold on September 5, 2024 and sell it today you would earn a total of 0.00 from holding New World Gold or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
New World Gold vs. Harmony Gold Mining
Performance |
| Timeline |
| New World Gold |
| Harmony Gold Mining |
New World and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Harmony Gold
The main advantage of trading using opposite New World and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World 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 World vs. Harmony Gold Mining | New World vs. SPACE | New World vs. T Rowe Price | New World 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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