Correlation Between Harmony Gold and Thor Explorations

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

Diversification Opportunities for Harmony Gold and Thor Explorations

0.16

Correlation Coefficient

Harmony Gold  Thor Explorations

Average diversification

The 3 months correlation between Harmony and Thor is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Thor Explorations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Explorations 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 Thor Explorations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Explorations has no effect on the direction of Harmony Gold i.e., Harmony Gold and Thor Explorations go up and down completely randomly.

Pair Corralation between Harmony Gold and Thor Explorations

Considering the 90-day investment horizon Harmony Gold is expected to generate 13.35 times less return on investment than Thor Explorations. But when comparing it to its historical volatility, Harmony Gold Mining is 2.36 times less risky than Thor Explorations. It trades about 0.01 of its potential returns per unit of risk. Thor Explorations is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Thor Explorations on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Thor Explorations or generate 5.0% return on investment over 90 days.

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

Harmony Gold Mining  vs.  Thor Explorations

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 fairly strong primary indicators, Harmony Gold is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Thor Explorations

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thor Explorations are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Thor Explorations reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harmony Gold and Thor Explorations

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

The idea behind Harmony Gold Mining and Thor Explorations 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.