Correlation Between Harmony Gold and Tsingtao Brewery

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

Diversification Opportunities for Harmony Gold and Tsingtao Brewery

-0.62

Correlation Coefficient

Harmony Gold  Tsingtao Brewery

Excellent diversification

The 3 months correlation between Harmony and Tsingtao is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery 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 Tsingtao Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsingtao Brewery has no effect on the direction of Harmony Gold i.e., Harmony Gold and Tsingtao Brewery go up and down completely randomly.

Pair Corralation between Harmony Gold and Tsingtao Brewery

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 0.94 times more return on investment than Tsingtao Brewery. However, Harmony Gold Mining is 1.07 times less risky than Tsingtao Brewery. It trades about 0.08 of its potential returns per unit of risk. Tsingtao Brewery is currently generating about 0.03 per unit of risk. If you would invest  321.00  in Harmony Gold Mining on December 2, 2024 and sell it today you would earn a total of  589.00  from holding Harmony Gold Mining or generate 183.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Harmony Gold Mining  vs.  Tsingtao Brewery

Harmony Gold Mining

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Harmony Gold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tsingtao Brewery

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tsingtao Brewery are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, Tsingtao Brewery may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Harmony Gold and Tsingtao Brewery

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

The idea behind Harmony Gold Mining and Tsingtao Brewery 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.