Correlation Between Tiger Brands and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Tiger Brands 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 Tiger Brands and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tiger Brands and Harmony Gold Mining, you can compare the effects of market volatilities on Tiger Brands 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 Tiger Brands with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiger Brands and Harmony Gold.
Diversification Opportunities for Tiger Brands and Harmony Gold
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tiger and Harmony is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Tiger Brands 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 Tiger Brands 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 Tiger Brands 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 Tiger Brands i.e., Tiger Brands and Harmony Gold go up and down completely randomly.
Pair Corralation between Tiger Brands and Harmony Gold
Assuming the 90 days trading horizon Tiger Brands is expected to generate 3.34 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Tiger Brands is 1.76 times less risky than Harmony Gold. It trades about 0.05 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 589,700 in Harmony Gold Mining on September 12, 2024 and sell it today you would earn a total of 1,099,600 from holding Harmony Gold Mining or generate 186.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tiger Brands vs. Harmony Gold Mining
Performance |
| Timeline |
| Tiger Brands |
| Harmony Gold Mining |
Tiger Brands and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tiger Brands and Harmony Gold
The main advantage of trading using opposite Tiger Brands and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiger Brands 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.| Tiger Brands vs. Harmony Gold Mining | Tiger Brands vs. Lesaka Technologies | Tiger Brands vs. AfroCentric Investment Corp | Tiger Brands vs. Bytes Technology |
| Harmony Gold vs. Frontier Transport Holdings | Harmony Gold vs. British American Tobacco | Harmony Gold vs. Master Drilling Group | Harmony Gold vs. MC Mining |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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