Correlation Between Harmony Gold and Sanyo Chemical

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

Diversification Opportunities for Harmony Gold and Sanyo Chemical

-0.21

Correlation Coefficient

Harmony Gold  Sanyo Chemical

Very good diversification

The 3 months correlation between Harmony and Sanyo is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries 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 Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of Harmony Gold i.e., Harmony Gold and Sanyo Chemical go up and down completely randomly.

Pair Corralation between Harmony Gold and Sanyo Chemical

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 3.66 times more return on investment than Sanyo Chemical. However, Harmony Gold is 3.66 times more volatile than Sanyo Chemical Industries. It trades about 0.04 of its potential returns per unit of risk. Sanyo Chemical Industries is currently generating about -0.01 per unit of risk. If you would invest  805.00  in Harmony Gold Mining on September 4, 2024 and sell it today you would earn a total of  45.00  from holding Harmony Gold Mining or generate 5.59% return on investment over 90 days.

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

Harmony Gold Mining  vs.  Sanyo Chemical Industries

Harmony Gold Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Harmony Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sanyo Chemical Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanyo Chemical Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sanyo Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Harmony Gold and Sanyo Chemical

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

The idea behind Harmony Gold Mining and Sanyo Chemical Industries 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.