Correlation Between BROADWIND ENRGY and Harmony Gold

Can any of the company-specific risk be diversified away by investing in both BROADWIND ENRGY and Harmony Gold 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 BROADWIND ENRGY and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BROADWIND ENRGY and Harmony Gold Mining, you can compare the effects of market volatilities on BROADWIND ENRGY and Harmony Gold 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 BROADWIND ENRGY with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of BROADWIND ENRGY and Harmony Gold.

Diversification Opportunities for BROADWIND ENRGY and Harmony Gold

0.29

Correlation Coefficient

BROADWIND ENRGY  Harmony Gold

Modest diversification

The 3 months correlation between BROADWIND and Harmony is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding BROADWIND ENRGY and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining and BROADWIND ENRGY 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 BROADWIND ENRGY are associated (or correlated) with Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of BROADWIND ENRGY i.e., BROADWIND ENRGY and Harmony Gold go up and down completely randomly.

Pair Corralation between BROADWIND ENRGY and Harmony Gold

Assuming the 90 days trading horizon BROADWIND ENRGY is expected to generate 1.48 times more return on investment than Harmony Gold. However, BROADWIND ENRGY is 1.48 times more volatile than Harmony Gold Mining. It trades about 0.13 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.11 per unit of risk. If you would invest  176.00  in BROADWIND ENRGY on October 9, 2024 and sell it today you would earn a total of  34.00  from holding BROADWIND ENRGY or generate 19.32% return on investment over 90 days.

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

BROADWIND ENRGY  vs.  Harmony Gold Mining

BROADWIND ENRGY

Risk-Adjusted Performance

2 of 100

Weak

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

Harmony Gold Mining

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Harmony Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BROADWIND ENRGY and Harmony Gold

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

The idea behind BROADWIND ENRGY and Harmony Gold Mining 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.