Correlation Between ADHI KARYA and Harmony Gold

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

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

Diversification Opportunities for ADHI KARYA and Harmony Gold

0.07

Correlation Coefficient

ADHI KARYA  Harmony Gold

Significant diversification

The 3 months correlation between ADHI and Harmony is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding ADHI KARYA 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 ADHI KARYA 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 ADHI KARYA 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 ADHI KARYA i.e., ADHI KARYA and Harmony Gold go up and down completely randomly.

Pair Corralation between ADHI KARYA and Harmony Gold

Assuming the 90 days trading horizon ADHI KARYA is expected to under-perform the Harmony Gold. In addition to that, ADHI KARYA is 2.36 times more volatile than Harmony Gold Mining. It trades about -0.01 of its total potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.02 per unit of volatility. If you would invest  845.00  in Harmony Gold Mining on September 3, 2024 and sell it today you would earn a total of  5.00  from holding Harmony Gold Mining or generate 0.59% return on investment over 90 days.

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

ADHI KARYA  vs.  Harmony Gold Mining

ADHI KARYA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADHI KARYA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ADHI KARYA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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. Despite nearly stable basic 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 ADHI KARYA and Harmony Gold

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

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.