Correlation Between Harmony Gold and Mining Global

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

Diversification Opportunities for Harmony Gold and Mining Global

0.11

Correlation Coefficient

Harmony Gold  Mining Global

Average diversification

The 3 months correlation between Harmony and Mining is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Mining Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mining Global 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 Mining Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mining Global has no effect on the direction of Harmony Gold i.e., Harmony Gold and Mining Global go up and down completely randomly.

Pair Corralation between Harmony Gold and Mining Global

Considering the 90-day investment horizon Harmony Gold Mining is expected to under-perform the Mining Global. But the stock apears to be less risky and, when comparing its historical volatility, Harmony Gold Mining is 63.68 times less risky than Mining Global. The stock trades about -0.16 of its potential returns per unit of risk. The Mining Global is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Mining Global on September 5, 2024 and sell it today you would lose (0.01) from holding Mining Global or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Harmony Gold Mining  vs.  Mining Global

Harmony Gold Mining

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Harmony Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mining Global

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mining Global are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Mining Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harmony Gold and Mining Global

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

The idea behind Harmony Gold Mining and Mining Global 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.