Correlation Between Harmony Gold and Buka Investments

Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Buka Investments 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 Harmony Gold and Buka Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Harmony Gold Mining and Buka Investments, you can compare the effects of market volatilities on Harmony Gold and Buka Investments 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 Harmony Gold with a short position of Buka Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Buka Investments.

Diversification Opportunities for Harmony Gold and Buka Investments

0.0

Correlation Coefficient

Harmony Gold  Buka Investments

Pay attention - limited upside

The 3 months correlation between Harmony and Buka is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Buka Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buka Investments and Harmony Gold 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 Harmony Gold Mining are associated (or correlated) with Buka Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buka Investments has no effect on the direction of Harmony Gold i.e., Harmony Gold and Buka Investments go up and down completely randomly.

Pair Corralation between Harmony Gold and Buka Investments

If you would invest  1,677,000  in Harmony Gold Mining on February 21, 2024 and sell it today you would earn a total of  164,300  from holding Harmony Gold Mining or generate 9.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Harmony Gold Mining  vs.  Buka Investments

Harmony Gold Mining

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking indicators, Harmony Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Buka Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Buka Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking indicators, Buka Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Harmony Gold and Buka Investments

The main advantage of trading using opposite Harmony Gold and Buka Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Buka Investments 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 Buka Investments will offset losses from the drop in Buka Investments' long position.

The idea behind Harmony Gold Mining and Buka Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.