Correlation Between Harmony Gold and Freeport McMoRan

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

Diversification Opportunities for Harmony Gold and Freeport McMoRan

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Correlation Coefficient

Harmony Gold  Freeport McMoRan

Pay attention - limited upside

The 3 months correlation between Harmony and Freeport is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 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 Freeport McMoRan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of Harmony Gold i.e., Harmony Gold and Freeport McMoRan go up and down completely randomly.

Pair Corralation between Harmony Gold and Freeport McMoRan

If you would invest (100.00) in Freeport McMoRan on September 27, 2024 and sell it today you would earn a total of  100.00  from holding Freeport McMoRan or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Harmony Gold Mining  vs.  Freeport McMoRan

Harmony Gold Mining

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Harmony Gold Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Freeport McMoRan

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Harmony Gold and Freeport McMoRan

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

The idea behind Harmony Gold Mining and Freeport McMoRan 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.