Correlation Between Brikor and Harmony Gold

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

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

Diversification Opportunities for Brikor and Harmony Gold

-0.26

Correlation Coefficient

Brikor  Harmony Gold

Very good diversification

The 3 months correlation between Brikor and Harmony is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Brikor 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 Brikor 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 Brikor 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 Brikor i.e., Brikor and Harmony Gold go up and down completely randomly.

Pair Corralation between Brikor and Harmony Gold

Assuming the 90 days trading horizon Brikor is expected to generate 2.22 times less return on investment than Harmony Gold. In addition to that, Brikor is 1.75 times more volatile than Harmony Gold Mining. It trades about 0.03 of its total potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.11 per unit of volatility. If you would invest  659,300  in Harmony Gold Mining on September 12, 2024 and sell it today you would earn a total of  1,030,000  from holding Harmony Gold Mining or generate 156.23% return on investment over 90 days.

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

Brikor  vs.  Harmony Gold Mining

Brikor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brikor are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Brikor exhibited solid returns over the last few months and may actually be approaching a breakup point.

Harmony Gold Mining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Harmony Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Brikor and Harmony Gold

The main advantage of trading using opposite Brikor and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brikor 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 Brikor 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.