Correlation Between Harmony Gold and Aurubis AG

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

Diversification Opportunities for Harmony Gold and Aurubis AG

-0.3

Correlation Coefficient

Harmony Gold  Aurubis AG

Very good diversification

The 3 months correlation between Harmony and Aurubis is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Aurubis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurubis AG 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 Aurubis AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurubis AG has no effect on the direction of Harmony Gold i.e., Harmony Gold and Aurubis AG go up and down completely randomly.

Pair Corralation between Harmony Gold and Aurubis AG

Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the Aurubis AG. But the stock apears to be less risky and, when comparing its historical volatility, Harmony Gold Mining is 1.36 times less risky than Aurubis AG. The stock trades about -0.19 of its potential returns per unit of risk. The Aurubis AG is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,605  in Aurubis AG on September 24, 2024 and sell it today you would earn a total of  185.00  from holding Aurubis AG or generate 2.43% return on investment over 90 days.

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

Harmony Gold Mining  vs.  Aurubis AG

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Aurubis AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurubis AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Aurubis AG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harmony Gold and Aurubis AG

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

The idea behind Harmony Gold Mining and Aurubis AG 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.