Correlation Between Harmony Gold and XBP Europe

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

Diversification Opportunities for Harmony Gold and XBP Europe

-0.29

Correlation Coefficient

Harmony Gold  XBP Europe

Very good diversification

The 3 months correlation between Harmony and XBP is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and XBP Europe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XBP Europe Holdings 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 XBP Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XBP Europe Holdings has no effect on the direction of Harmony Gold i.e., Harmony Gold and XBP Europe go up and down completely randomly.

Pair Corralation between Harmony Gold and XBP Europe

Assuming the 90 days horizon Harmony Gold is expected to generate 1.55 times less return on investment than XBP Europe. But when comparing it to its historical volatility, Harmony Gold Mining is 5.26 times less risky than XBP Europe. It trades about 0.21 of its potential returns per unit of risk. XBP Europe Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4.00  in XBP Europe Holdings on December 20, 2024 and sell it today you would lose (1.47) from holding XBP Europe Holdings or give up 36.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Harmony Gold Mining  vs.  XBP Europe Holdings

Harmony Gold Mining

Risk-Adjusted Performance

Good

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.

XBP Europe Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in XBP Europe Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, XBP Europe showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harmony Gold and XBP Europe

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

The idea behind Harmony Gold Mining and XBP Europe Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.