Correlation Between Solarmax Technology and Harmony Gold

Can any of the company-specific risk be diversified away by investing in both Solarmax Technology and Harmony Gold 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 Solarmax Technology and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solarmax Technology Common and Harmony Gold Mining, you can compare the effects of market volatilities on Solarmax Technology and Harmony Gold 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 Solarmax Technology with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solarmax Technology and Harmony Gold.

Diversification Opportunities for Solarmax Technology and Harmony Gold

-0.57

Correlation Coefficient

Solarmax Technology  Harmony Gold

Excellent diversification

The 3 months correlation between Solarmax and Harmony is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Solarmax Technology Common and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining and Solarmax Technology 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 Solarmax Technology Common are associated (or correlated) with Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Solarmax Technology i.e., Solarmax Technology and Harmony Gold go up and down completely randomly.

Pair Corralation between Solarmax Technology and Harmony Gold

Given the investment horizon of 90 days Solarmax Technology Common is expected to under-perform the Harmony Gold. In addition to that, Solarmax Technology is 5.58 times more volatile than Harmony Gold Mining. It trades about -0.05 of its total potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.17 per unit of volatility. If you would invest  929.00  in Harmony Gold Mining on October 11, 2024 and sell it today you would lose (68.00) from holding Harmony Gold Mining or give up 7.32% of portfolio value over 90 days.

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

Solarmax Technology Common  vs.  Harmony Gold Mining

Solarmax Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solarmax Technology Common are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Solarmax Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Solarmax Technology and Harmony Gold

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

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