Correlation Between Transportadora and Harmony Gold

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

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

Diversification Opportunities for Transportadora and Harmony Gold

-0.63

Correlation Coefficient

Transportadora  Harmony Gold

Excellent diversification

The 3 months correlation between Transportadora and Harmony is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas 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 Transportadora 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 Transportadora de Gas 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 Transportadora i.e., Transportadora and Harmony Gold go up and down completely randomly.

Pair Corralation between Transportadora and Harmony Gold

Considering the 90-day investment horizon Transportadora de Gas is expected to under-perform the Harmony Gold. But the stock apears to be less risky and, when comparing its historical volatility, Transportadora de Gas is 1.14 times less risky than Harmony Gold. The stock trades about 0.0 of its potential returns per unit of risk. The Harmony Gold Mining is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  827.00  in Harmony Gold Mining on December 24, 2024 and sell it today you would earn a total of  373.00  from holding Harmony Gold Mining or generate 45.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.0%
Values	Daily Returns

Transportadora de Gas  vs.  Harmony Gold Mining

Transportadora de Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transportadora de Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Transportadora is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Harmony Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transportadora and Harmony Gold

The main advantage of trading using opposite Transportadora and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora 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 Transportadora de Gas 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.