Correlation Between Harmony Gold and Valmont Industries

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

Diversification Opportunities for Harmony Gold and Valmont Industries

-0.12

Correlation Coefficient

Harmony Gold  Valmont Industries

Good diversification

The 3 months correlation between Harmony and Valmont is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Valmont Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valmont Industries 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 Valmont Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valmont Industries has no effect on the direction of Harmony Gold i.e., Harmony Gold and Valmont Industries go up and down completely randomly.

Pair Corralation between Harmony Gold and Valmont Industries

Considering the 90-day investment horizon Harmony Gold Mining is expected to under-perform the Valmont Industries. In addition to that, Harmony Gold is 1.66 times more volatile than Valmont Industries. It trades about -0.17 of its total potential returns per unit of risk. Valmont Industries is currently generating about -0.27 per unit of volatility. If you would invest  33,065  in Valmont Industries on October 11, 2024 and sell it today you would lose (2,314) from holding Valmont Industries or give up 7.0% 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.  Valmont Industries

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. In spite of latest uncertain performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Valmont Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Valmont Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong primary indicators, Valmont Industries is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Harmony Gold and Valmont Industries

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

The idea behind Harmony Gold Mining and Valmont Industries 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.