Correlation Between Harmony Gold and Camuzzi Gas

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

Diversification Opportunities for Harmony Gold and Camuzzi Gas

-0.8

Correlation Coefficient

Harmony Gold  Camuzzi Gas

Pay attention - limited upside

The 3 months correlation between Harmony and Camuzzi is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Camuzzi Gas Pampeana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camuzzi Gas Pampeana 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 Camuzzi Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camuzzi Gas Pampeana has no effect on the direction of Harmony Gold i.e., Harmony Gold and Camuzzi Gas go up and down completely randomly.

Pair Corralation between Harmony Gold and Camuzzi Gas

Assuming the 90 days trading horizon Harmony Gold Mining is expected to under-perform the Camuzzi Gas. But the stock apears to be less risky and, when comparing its historical volatility, Harmony Gold Mining is 1.05 times less risky than Camuzzi Gas. The stock trades about -0.09 of its potential returns per unit of risk. The Camuzzi Gas Pampeana is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  200,500  in Camuzzi Gas Pampeana on September 17, 2024 and sell it today you would earn a total of  151,000  from holding Camuzzi Gas Pampeana or generate 75.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Harmony Gold Mining  vs.  Camuzzi Gas Pampeana

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 weak performance in the last few months, the Stock's basic indicators remain somewhat 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.

Camuzzi Gas Pampeana

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Camuzzi Gas Pampeana are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Camuzzi Gas sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harmony Gold and Camuzzi Gas

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

The idea behind Harmony Gold Mining and Camuzzi Gas Pampeana 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..