Correlation Between Harmony Gold and Suntory Beverage

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

Diversification Opportunities for Harmony Gold and Suntory Beverage

0.23

Correlation Coefficient

Harmony Gold  Suntory Beverage

Modest diversification

The 3 months correlation between Harmony and Suntory is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Suntory Beverage Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntory Beverage Food 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 Suntory Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntory Beverage Food has no effect on the direction of Harmony Gold i.e., Harmony Gold and Suntory Beverage go up and down completely randomly.

Pair Corralation between Harmony Gold and Suntory Beverage

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 3.57 times more return on investment than Suntory Beverage. However, Harmony Gold is 3.57 times more volatile than Suntory Beverage Food. It trades about 0.21 of its potential returns per unit of risk. Suntory Beverage Food is currently generating about 0.04 per unit of risk. If you would invest  827.00  in Harmony Gold Mining on December 21, 2024 and sell it today you would earn a total of  423.00  from holding Harmony Gold Mining or generate 51.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	83.05%
Values	Daily Returns

Harmony Gold Mining  vs.  Suntory Beverage Food

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 16 (%) 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.

Suntory Beverage Food

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Suntory Beverage Food are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Suntory Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harmony Gold and Suntory Beverage

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

The idea behind Harmony Gold Mining and Suntory Beverage Food 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.