Correlation Between Harmony Gold and FTAI Aviation

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

Diversification Opportunities for Harmony Gold and FTAI Aviation

-0.04

Correlation Coefficient

Harmony Gold  FTAI Aviation

Good diversification

The 3 months correlation between Harmony and FTAI is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation 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 FTAI Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Aviation has no effect on the direction of Harmony Gold i.e., Harmony Gold and FTAI Aviation go up and down completely randomly.

Pair Corralation between Harmony Gold and FTAI Aviation

Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the FTAI Aviation. In addition to that, Harmony Gold is 4.05 times more volatile than FTAI Aviation Ltd. It trades about -0.02 of its total potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.06 per unit of volatility. If you would invest  2,554  in FTAI Aviation Ltd on September 12, 2024 and sell it today you would earn a total of  77.00  from holding FTAI Aviation Ltd or generate 3.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Harmony Gold Mining  vs.  FTAI Aviation Ltd

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.

FTAI Aviation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FTAI Aviation Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, FTAI Aviation is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Harmony Gold and FTAI Aviation

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

The idea behind Harmony Gold Mining and FTAI Aviation Ltd 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.