Correlation Between Harmony Gold and Trellidor Holdings

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

Diversification Opportunities for Harmony Gold and Trellidor Holdings

0.53

Correlation Coefficient

Harmony Gold  Trellidor Holdings

Very weak diversification

The 3 months correlation between Harmony and Trellidor is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Trellidor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellidor Holdings 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 Trellidor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellidor Holdings has no effect on the direction of Harmony Gold i.e., Harmony Gold and Trellidor Holdings go up and down completely randomly.

Pair Corralation between Harmony Gold and Trellidor Holdings

Assuming the 90 days trading horizon Harmony Gold Mining is expected to generate 0.41 times more return on investment than Trellidor Holdings. However, Harmony Gold Mining is 2.43 times less risky than Trellidor Holdings. It trades about 0.24 of its potential returns per unit of risk. Trellidor Holdings is currently generating about 0.07 per unit of risk. If you would invest  1,566,800  in Harmony Gold Mining on December 24, 2024 and sell it today you would earn a total of  743,200  from holding Harmony Gold Mining or generate 47.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Harmony Gold Mining  vs.  Trellidor Holdings

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 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Harmony Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Trellidor Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trellidor Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Trellidor Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harmony Gold and Trellidor Holdings

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

The idea behind Harmony Gold Mining and Trellidor Holdings 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.

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.