Correlation Between Flexible Solutions and Harmony Gold

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

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

Diversification Opportunities for Flexible Solutions and Harmony Gold

0.02

Correlation Coefficient

Flexible Solutions  Harmony Gold

Significant diversification

The 3 months correlation between Flexible and Harmony is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation 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 Flexible Solutions 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 Flexible Solutions International 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 Flexible Solutions i.e., Flexible Solutions and Harmony Gold go up and down completely randomly.

Pair Corralation between Flexible Solutions and Harmony Gold

Considering the 90-day investment horizon Flexible Solutions is expected to generate 2.14 times less return on investment than Harmony Gold. In addition to that, Flexible Solutions is 1.0 times more volatile than Harmony Gold Mining. It trades about 0.04 of its total potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.08 per unit of volatility. If you would invest  332.00  in Harmony Gold Mining on September 13, 2024 and sell it today you would earn a total of  582.00  from holding Harmony Gold Mining or generate 175.3% return on investment over 90 days.

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

Flexible Solutions Internation  vs.  Harmony Gold Mining

Flexible Solutions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Flexible Solutions International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Flexible Solutions demonstrated 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. In spite of fairly strong primary indicators, Harmony Gold is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Flexible Solutions and Harmony Gold

The main advantage of trading using opposite Flexible Solutions and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions 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 Flexible Solutions International 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 CEOs Directory module to screen CEOs from public companies around the world.