Correlation Between Harmony Gold and Valens

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

Diversification Opportunities for Harmony Gold and Valens

-0.43

Correlation Coefficient

Harmony Gold  Valens

Very good diversification

The 3 months correlation between Harmony and Valens is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens 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 Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of Harmony Gold i.e., Harmony Gold and Valens go up and down completely randomly.

Pair Corralation between Harmony Gold and Valens

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 1.05 times more return on investment than Valens. However, Harmony Gold is 1.05 times more volatile than Valens. It trades about 0.09 of its potential returns per unit of risk. Valens is currently generating about -0.03 per unit of risk. If you would invest  375.00  in Harmony Gold Mining on September 24, 2024 and sell it today you would earn a total of  575.00  from holding Harmony Gold Mining or generate 153.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	65.46%
Values	Daily Returns

Harmony Gold Mining  vs.  Valens

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Valens

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Harmony Gold and Valens

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

The idea behind Harmony Gold Mining and Valens 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.