Correlation Between South32 and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both South32 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 South32 and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South32 and Harmony Gold Mining, you can compare the effects of market volatilities on South32 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 South32 with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of South32 and Harmony Gold.
Diversification Opportunities for South32 and Harmony Gold
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between South32 and Harmony is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding South32 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 South32 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 South32 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 South32 i.e., South32 and Harmony Gold go up and down completely randomly.
Pair Corralation between South32 and Harmony Gold
Assuming the 90 days trading horizon South32 is expected to generate 4.25 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, South32 is 2.94 times less risky than Harmony Gold. It trades about 0.35 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 1,566,800 in Harmony Gold Mining on October 25, 2024 and sell it today you would earn a total of 396,100 from holding Harmony Gold Mining or generate 25.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
South32 vs. Harmony Gold Mining
Performance |
| Timeline |
| South32 |
| Harmony Gold Mining |
South32 and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South32 and Harmony Gold
The main advantage of trading using opposite South32 and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South32 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.| South32 vs. Mantengu Mining | South32 vs. Datatec | South32 vs. Advtech | South32 vs. Frontier Transport Holdings |
| Harmony Gold vs. Nedbank Group | Harmony Gold vs. HomeChoice Investments | Harmony Gold vs. Bytes Technology | Harmony Gold vs. eMedia Holdings Limited |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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