Correlation Between Edesa Holding and Harmony Gold

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

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

Diversification Opportunities for Edesa Holding and Harmony Gold

0.0

Correlation Coefficient

Edesa Holding  Harmony Gold

Pay attention - limited upside

The 3 months correlation between Edesa and Harmony is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Edesa Holding SA 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 Edesa Holding 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 Edesa Holding SA 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 Edesa Holding i.e., Edesa Holding and Harmony Gold go up and down completely randomly.

Pair Corralation between Edesa Holding and Harmony Gold

If you would invest  973,000  in Harmony Gold Mining on December 27, 2024 and sell it today you would earn a total of  692,000  from holding Harmony Gold Mining or generate 71.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Edesa Holding SA  vs.  Harmony Gold Mining

Edesa Holding SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edesa Holding SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Edesa Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Harmony Gold Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harmony Gold sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Edesa Holding and Harmony Gold

The main advantage of trading using opposite Edesa Holding and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edesa Holding 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 Edesa Holding SA 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.