Correlation Between NorAm Drilling and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling 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 NorAm Drilling and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorAm Drilling AS and Harmony Gold Mining, you can compare the effects of market volatilities on NorAm Drilling 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 NorAm Drilling with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Harmony Gold.
Diversification Opportunities for NorAm Drilling and Harmony Gold
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NorAm and Harmony is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS 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 NorAm Drilling 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 NorAm Drilling AS 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 NorAm Drilling i.e., NorAm Drilling and Harmony Gold go up and down completely randomly.
Pair Corralation between NorAm Drilling and Harmony Gold
Assuming the 90 days trading horizon NorAm Drilling AS is expected to generate 0.94 times more return on investment than Harmony Gold. However, NorAm Drilling AS is 1.06 times less risky than Harmony Gold. It trades about 0.16 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.01 per unit of risk. If you would invest 239.00 in NorAm Drilling AS on August 29, 2024 and sell it today you would earn a total of 59.00 from holding NorAm Drilling AS or generate 24.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
NorAm Drilling AS vs. Harmony Gold Mining
Performance |
| Timeline |
| NorAm Drilling AS |
| Harmony Gold Mining |
NorAm Drilling and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Harmony Gold
The main advantage of trading using opposite NorAm Drilling and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling 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.| NorAm Drilling vs. Apple Inc | NorAm Drilling vs. Apple Inc | NorAm Drilling vs. Apple Inc | NorAm Drilling vs. Apple Inc |
| Harmony Gold vs. Franco Nevada | Harmony Gold vs. Wheaton Precious Metals | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. NMI Holdings |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |