Correlation Between Harmony Gold and Siriuspoint

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

Diversification Opportunities for Harmony Gold and Siriuspoint

-0.62

Correlation Coefficient

Harmony Gold  Siriuspoint

Excellent diversification

The 3 months correlation between Harmony and Siriuspoint is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint 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 Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of Harmony Gold i.e., Harmony Gold and Siriuspoint go up and down completely randomly.

Pair Corralation between Harmony Gold and Siriuspoint

Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the Siriuspoint. In addition to that, Harmony Gold is 1.74 times more volatile than Siriuspoint. It trades about -0.02 of its total potential returns per unit of risk. Siriuspoint is currently generating about 0.08 per unit of volatility. If you would invest  1,417  in Siriuspoint on September 15, 2024 and sell it today you would earn a total of  131.00  from holding Siriuspoint or generate 9.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Harmony Gold Mining  vs.  Siriuspoint

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.

Siriuspoint

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Siriuspoint may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Harmony Gold and Siriuspoint

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

The idea behind Harmony Gold Mining and Siriuspoint 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.