Correlation Between Centerra Gold and Harmony Gold

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

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

Diversification Opportunities for Centerra Gold and Harmony Gold

0.89

Correlation Coefficient

Centerra Gold  Harmony Gold

Very poor diversification

The 3 months correlation between Centerra and Harmony is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Centerra Gold 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 Centerra 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 Centerra Gold 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 Centerra Gold i.e., Centerra Gold and Harmony Gold go up and down completely randomly.

Pair Corralation between Centerra Gold and Harmony Gold

Given the investment horizon of 90 days Centerra Gold is expected to under-perform the Harmony Gold. But the stock apears to be less risky and, when comparing its historical volatility, Centerra Gold is 1.39 times less risky than Harmony Gold. The stock trades about -0.12 of its potential returns per unit of risk. The Harmony Gold Mining is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  978.00  in Harmony Gold Mining on October 13, 2024 and sell it today you would lose (67.00) from holding Harmony Gold Mining or give up 6.85% of portfolio value over 90 days.

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

Centerra Gold  vs.  Harmony Gold Mining

Centerra Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centerra Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

Pair Trading with Centerra Gold and Harmony Gold

The main advantage of trading using opposite Centerra Gold and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centerra Gold 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 Centerra Gold 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..