Correlation Between EMBARQ and Harmony Gold

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

By analyzing existing cross correlation between EMBARQ P 7995 and Harmony Gold Mining, you can compare the effects of market volatilities on EMBARQ 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 EMBARQ with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMBARQ and Harmony Gold.

Diversification Opportunities for EMBARQ and Harmony Gold

-0.19

Correlation Coefficient

EMBARQ  Harmony Gold

Good diversification

The 3 months correlation between EMBARQ and Harmony is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding EMBARQ P 7995 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 EMBARQ 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 EMBARQ P 7995 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 EMBARQ i.e., EMBARQ and Harmony Gold go up and down completely randomly.

Pair Corralation between EMBARQ and Harmony Gold

Assuming the 90 days trading horizon EMBARQ P 7995 is expected to generate 0.53 times more return on investment than Harmony Gold. However, EMBARQ P 7995 is 1.89 times less risky than Harmony Gold. It trades about 0.27 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.22 per unit of risk. If you would invest  4,788  in EMBARQ P 7995 on September 18, 2024 and sell it today you would earn a total of  687.00  from holding EMBARQ P 7995 or generate 14.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

EMBARQ P 7995  vs.  Harmony Gold Mining

EMBARQ P 7995

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMBARQ P 7995 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for EMBARQ P 7995 investors.

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. Despite nearly stable fundamental indicators, Harmony Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with EMBARQ and Harmony Gold

The main advantage of trading using opposite EMBARQ and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMBARQ 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 EMBARQ P 7995 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.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.