Correlation Between Harmony Gold and Citi Trends

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

Diversification Opportunities for Harmony Gold and Citi Trends

0.55

Correlation Coefficient

Harmony Gold  Citi Trends

Very weak diversification

The 3 months correlation between Harmony and Citi is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends 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 Citi Trends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citi Trends has no effect on the direction of Harmony Gold i.e., Harmony Gold and Citi Trends go up and down completely randomly.

Pair Corralation between Harmony Gold and Citi Trends

Assuming the 90 days horizon Harmony Gold is expected to generate 1.08 times less return on investment than Citi Trends. In addition to that, Harmony Gold is 1.91 times more volatile than Citi Trends. It trades about 0.07 of its total potential returns per unit of risk. Citi Trends is currently generating about 0.15 per unit of volatility. If you would invest  1,405  in Citi Trends on December 5, 2024 and sell it today you would earn a total of  1,030  from holding Citi Trends or generate 73.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	35.77%
Values	Daily Returns

Harmony Gold Mining  vs.  Citi Trends

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 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, Harmony Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Citi Trends

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citi Trends has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Citi Trends is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Harmony Gold and Citi Trends

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

The idea behind Harmony Gold Mining and Citi Trends 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.