Correlation Between Harmony Gold and Hudson Technologies

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

Diversification Opportunities for Harmony Gold and Hudson Technologies

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Harmony and Hudson is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies 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 Hudson Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Technologies has no effect on the direction of Harmony Gold i.e., Harmony Gold and Hudson Technologies go up and down completely randomly.

Pair Corralation between Harmony Gold and Hudson Technologies

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 1.02 times more return on investment than Hudson Technologies. However, Harmony Gold is 1.02 times more volatile than Hudson Technologies. It trades about -0.04 of its potential returns per unit of risk. Hudson Technologies is currently generating about -0.18 per unit of risk. If you would invest  1,069  in Harmony Gold Mining on September 26, 2024 and sell it today you would lose (119.00) from holding Harmony Gold Mining or give up 11.13% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy96.83%
ValuesDaily Returns

Harmony Gold Mining  vs.  Hudson Technologies

 Performance 
       Timeline  
Harmony Gold Mining 

Risk-Adjusted Performance

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Weak
 
Strong
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 weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Hudson Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hudson Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Harmony Gold and Hudson Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Harmony Gold and Hudson Technologies

The main advantage of trading using opposite Harmony Gold and Hudson Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Hudson Technologies 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 Hudson Technologies will offset losses from the drop in Hudson Technologies' long position.
The idea behind Harmony Gold Mining and Hudson Technologies 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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