Correlation Between Harmony Gold and Halliburton

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

Diversification Opportunities for Harmony Gold and Halliburton

-0.16

Correlation Coefficient

Harmony Gold  Halliburton

Good diversification

The 3 months correlation between Harmony and Halliburton is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Halliburton Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton 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 Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Harmony Gold i.e., Harmony Gold and Halliburton go up and down completely randomly.

Pair Corralation between Harmony Gold and Halliburton

Assuming the 90 days trading horizon Harmony Gold Mining is expected to generate 1.55 times more return on investment than Halliburton. However, Harmony Gold is 1.55 times more volatile than Halliburton Co. It trades about 0.29 of its potential returns per unit of risk. Halliburton Co is currently generating about 0.02 per unit of risk. If you would invest  976,000  in Harmony Gold Mining on December 24, 2024 and sell it today you would earn a total of  661,500  from holding Harmony Gold Mining or generate 67.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Harmony Gold Mining  vs.  Halliburton Co

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 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harmony Gold sustained solid returns over the last few months and may actually be approaching a breakup point.

Halliburton

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Halliburton 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 Halliburton

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

The idea behind Harmony Gold Mining and Halliburton Co 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.