Correlation Between Harmony Gold and Salesforce

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Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Salesforce 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 Salesforce 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 Salesforce, you can compare the effects of market volatilities on Harmony Gold and Salesforce 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 Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Salesforce.

Diversification Opportunities for Harmony Gold and Salesforce

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Harmony and Salesforce is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce 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 Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Harmony Gold i.e., Harmony Gold and Salesforce go up and down completely randomly.

Pair Corralation between Harmony Gold and Salesforce

Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the Salesforce. But the stock apears to be less risky and, when comparing its historical volatility, Harmony Gold Mining is 1.3 times less risky than Salesforce. The stock trades about -0.18 of its potential returns per unit of risk. The Salesforce is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  32,516  in Salesforce on September 27, 2024 and sell it today you would earn a total of  119.00  from holding Salesforce or generate 0.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Harmony Gold Mining  vs.  Salesforce

 Performance 
       Timeline  
Harmony Gold Mining 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Salesforce 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Salesforce unveiled solid returns over the last few months and may actually be approaching a breakup point.

Harmony Gold and Salesforce Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Harmony Gold and Salesforce

The main advantage of trading using opposite Harmony Gold and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce's long position.
The idea behind Harmony Gold Mining and Salesforce 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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