Correlation Between Harmony Gold and Baldwin Insurance

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

Diversification Opportunities for Harmony Gold and Baldwin Insurance

0.55

Correlation Coefficient

Harmony Gold  Baldwin Insurance

Very weak diversification

The 3 months correlation between Harmony and Baldwin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and The Baldwin Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baldwin Insurance 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 Baldwin Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baldwin Insurance has no effect on the direction of Harmony Gold i.e., Harmony Gold and Baldwin Insurance go up and down completely randomly.

Pair Corralation between Harmony Gold and Baldwin Insurance

Considering the 90-day investment horizon Harmony Gold Mining is expected to under-perform the Baldwin Insurance. In addition to that, Harmony Gold is 1.11 times more volatile than The Baldwin Insurance. It trades about -0.08 of its total potential returns per unit of risk. The Baldwin Insurance is currently generating about -0.08 per unit of volatility. If you would invest  4,775  in The Baldwin Insurance on September 22, 2024 and sell it today you would lose (800.00) from holding The Baldwin Insurance or give up 16.75% of portfolio value over 90 days.

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

Harmony Gold Mining  vs.  The Baldwin Insurance

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. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Baldwin Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Baldwin Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Harmony Gold and Baldwin Insurance

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

The idea behind Harmony Gold Mining and The Baldwin Insurance 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.