Correlation Between Snowline Gold and Harmony Gold

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

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

Diversification Opportunities for Snowline Gold and Harmony Gold

0.79

Correlation Coefficient

Snowline Gold  Harmony Gold

Poor diversification

The 3 months correlation between Snowline and Harmony is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Snowline Gold Corp 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 Snowline 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 Snowline Gold Corp 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 Snowline Gold i.e., Snowline Gold and Harmony Gold go up and down completely randomly.

Pair Corralation between Snowline Gold and Harmony Gold

Assuming the 90 days horizon Snowline Gold Corp is expected to generate 0.67 times more return on investment than Harmony Gold. However, Snowline Gold Corp is 1.5 times less risky than Harmony Gold. It trades about 0.06 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.01 per unit of risk. If you would invest  354.00  in Snowline Gold Corp on September 4, 2024 and sell it today you would earn a total of  29.00  from holding Snowline Gold Corp or generate 8.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Snowline Gold Corp  vs.  Harmony Gold Mining

Snowline Gold Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Snowline Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Snowline Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Harmony Gold Mining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Harmony Gold is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Snowline Gold and Harmony Gold

The main advantage of trading using opposite Snowline Gold and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snowline Gold 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 Snowline Gold Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.