Correlation Between Vulcan Materials and Harmony Gold

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

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

Diversification Opportunities for Vulcan Materials and Harmony Gold

-0.56

Correlation Coefficient

Vulcan Materials  Harmony Gold

Excellent diversification

The 3 months correlation between Vulcan and Harmony is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials 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 Vulcan Materials 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 Vulcan Materials 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 Vulcan Materials i.e., Vulcan Materials and Harmony Gold go up and down completely randomly.

Pair Corralation between Vulcan Materials and Harmony Gold

Considering the 90-day investment horizon Vulcan Materials is expected to under-perform the Harmony Gold. But the stock apears to be less risky and, when comparing its historical volatility, Vulcan Materials is 2.63 times less risky than Harmony Gold. The stock trades about -0.08 of its potential returns per unit of risk. The Harmony Gold Mining is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  827.00  in Harmony Gold Mining on December 20, 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	Very Weak
Accuracy	81.36%
Values	Daily Returns

Vulcan Materials  vs.  Harmony Gold Mining

Vulcan Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vulcan Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 fragile fundamental indicators, Harmony Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vulcan Materials and Harmony Gold

The main advantage of trading using opposite Vulcan Materials and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials 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 Vulcan Materials 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.