Correlation Between FLOW TRADERS and Harmony Gold

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

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

Diversification Opportunities for FLOW TRADERS and Harmony Gold

0.14

Correlation Coefficient

FLOW TRADERS  Harmony Gold

Average diversification

The 3 months correlation between FLOW and Harmony is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD 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 FLOW TRADERS 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 FLOW TRADERS LTD 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 FLOW TRADERS i.e., FLOW TRADERS and Harmony Gold go up and down completely randomly.

Pair Corralation between FLOW TRADERS and Harmony Gold

Assuming the 90 days horizon FLOW TRADERS LTD is expected to generate 0.41 times more return on investment than Harmony Gold. However, FLOW TRADERS LTD is 2.43 times less risky than Harmony Gold. It trades about 0.22 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.01 per unit of risk. If you would invest  1,810  in FLOW TRADERS LTD on September 18, 2024 and sell it today you would earn a total of  368.00  from holding FLOW TRADERS LTD or generate 20.33% return on investment over 90 days.

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

FLOW TRADERS LTD  vs.  Harmony Gold Mining

FLOW TRADERS LTD

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FLOW TRADERS LTD are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FLOW TRADERS reported solid returns over the last few months and may actually be approaching a breakup point.

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 basic indicators, Harmony Gold is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FLOW TRADERS and Harmony Gold

The main advantage of trading using opposite FLOW TRADERS and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS 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 FLOW TRADERS LTD 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.