Correlation Between American Virtual and Harmony Gold

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

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

Diversification Opportunities for American Virtual and Harmony Gold

-0.33

Correlation Coefficient

American Virtual  Harmony Gold

Very good diversification

The 3 months correlation between American and Harmony is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Virtual Cloud 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 American Virtual 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 American Virtual Cloud 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 American Virtual i.e., American Virtual and Harmony Gold go up and down completely randomly.

Pair Corralation between American Virtual and Harmony Gold

If you would invest  0.60  in American Virtual Cloud on September 13, 2024 and sell it today you would earn a total of  0.00  from holding American Virtual Cloud or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

American Virtual Cloud  vs.  Harmony Gold Mining

American Virtual Cloud

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Virtual Cloud has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, American Virtual is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Harmony Gold Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harmony Gold Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Harmony Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with American Virtual and Harmony Gold

The main advantage of trading using opposite American Virtual and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Virtual 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.

The idea behind American Virtual Cloud and Harmony Gold Mining 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.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.