Correlation Between Harmony Gold and Mesa Air

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

Diversification Opportunities for Harmony Gold and Mesa Air

-0.44

Correlation Coefficient

Harmony Gold  Mesa Air

Very good diversification

The 3 months correlation between Harmony and Mesa is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Mesa Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesa Air Group 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 Mesa Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesa Air Group has no effect on the direction of Harmony Gold i.e., Harmony Gold and Mesa Air go up and down completely randomly.

Pair Corralation between Harmony Gold and Mesa Air

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 0.85 times more return on investment than Mesa Air. However, Harmony Gold Mining is 1.17 times less risky than Mesa Air. It trades about -0.02 of its potential returns per unit of risk. Mesa Air Group is currently generating about -0.04 per unit of risk. If you would invest  1,033  in Harmony Gold Mining on September 14, 2024 and sell it today you would lose (83.00) from holding Harmony Gold Mining or give up 8.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Harmony Gold Mining  vs.  Mesa Air Group

Harmony Gold Mining

Risk-Adjusted Performance

0 of 100

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 nearly stable fundamental indicators, Harmony Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Mesa Air Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mesa Air Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Harmony Gold and Mesa Air

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

The idea behind Harmony Gold Mining and Mesa Air Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.