Correlation Between Harmony Gold and Truworths International

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

Diversification Opportunities for Harmony Gold and Truworths International

-0.77

Correlation Coefficient

Harmony Gold  Truworths International

Pay attention - limited upside

The 3 months correlation between Harmony and Truworths is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Truworths International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truworths International 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 Truworths International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truworths International has no effect on the direction of Harmony Gold i.e., Harmony Gold and Truworths International go up and down completely randomly.

Pair Corralation between Harmony Gold and Truworths International

Assuming the 90 days trading horizon Harmony Gold Mining is expected to generate 1.62 times more return on investment than Truworths International. However, Harmony Gold is 1.62 times more volatile than Truworths International. It trades about 0.26 of its potential returns per unit of risk. Truworths International is currently generating about -0.32 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  806,000  from holding Harmony Gold Mining or generate 51.44% return on investment over 90 days.

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

Harmony Gold Mining  vs.  Truworths International

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 20 (%) 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.

Truworths International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Truworths International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Harmony Gold and Truworths International

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

The idea behind Harmony Gold Mining and Truworths International 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..