Correlation Between Harmony Gold and Consol Energy

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

Diversification Opportunities for Harmony Gold and Consol Energy

-0.44

Correlation Coefficient

Harmony Gold  Consol Energy

Very good diversification

The 3 months correlation between Harmony and Consol is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy 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 Consol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consol Energy has no effect on the direction of Harmony Gold i.e., Harmony Gold and Consol Energy go up and down completely randomly.

Pair Corralation between Harmony Gold and Consol Energy

Considering the 90-day investment horizon Harmony Gold Mining is expected to generate 1.42 times more return on investment than Consol Energy. However, Harmony Gold is 1.42 times more volatile than Consol Energy. It trades about -0.17 of its potential returns per unit of risk. Consol Energy is currently generating about -0.64 per unit of risk. If you would invest  920.00  in Harmony Gold Mining on September 25, 2024 and sell it today you would lose (88.00) from holding Harmony Gold Mining or give up 9.57% of portfolio value over 90 days.

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

Harmony Gold Mining  vs.  Consol Energy

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 uncertain performance in the last few months, the Stock's primary indicators remain fairly 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.

Consol Energy

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Consol Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Consol Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harmony Gold and Consol Energy

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

The idea behind Harmony Gold Mining and Consol Energy 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.