Correlation Between Harmony Gold and SilverCrest Metals

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

Diversification Opportunities for Harmony Gold and SilverCrest Metals

0.38

Correlation Coefficient

Harmony Gold  SilverCrest Metals

Weak diversification

The 3 months correlation between Harmony and SilverCrest is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and SilverCrest Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SilverCrest Metals 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 SilverCrest Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SilverCrest Metals has no effect on the direction of Harmony Gold i.e., Harmony Gold and SilverCrest Metals go up and down completely randomly.

Pair Corralation between Harmony Gold and SilverCrest Metals

Considering the 90-day investment horizon Harmony Gold Mining is expected to generate 1.04 times more return on investment than SilverCrest Metals. However, Harmony Gold is 1.04 times more volatile than SilverCrest Metals. It trades about 0.07 of its potential returns per unit of risk. SilverCrest Metals is currently generating about 0.04 per unit of risk. If you would invest  344.00  in Harmony Gold Mining on September 24, 2024 and sell it today you would earn a total of  498.50  from holding Harmony Gold Mining or generate 144.91% return on investment over 90 days.

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

Harmony Gold Mining  vs.  SilverCrest Metals

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 unfluctuating 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.

SilverCrest Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SilverCrest Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, SilverCrest Metals is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Harmony Gold and SilverCrest Metals

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

The idea behind Harmony Gold Mining and SilverCrest Metals 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.