Correlation Between Consol Energy and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Consol Energy 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 Consol Energy and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and Harmony Gold Mining, you can compare the effects of market volatilities on Consol Energy 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 Consol Energy with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and Harmony Gold.
Diversification Opportunities for Consol Energy and Harmony Gold
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Consol and Harmony is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy 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 Consol Energy 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 Consol Energy 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 Consol Energy i.e., Consol Energy and Harmony Gold go up and down completely randomly.
Pair Corralation between Consol Energy and Harmony Gold
Given the investment horizon of 90 days Consol Energy is expected to generate 0.89 times more return on investment than Harmony Gold. However, Consol Energy is 1.12 times less risky than Harmony Gold. It trades about 0.34 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.21 per unit of risk. If you would invest 10,612 in Consol Energy on August 24, 2024 and sell it today you would earn a total of 2,652 from holding Consol Energy or generate 24.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consol Energy vs. Harmony Gold Mining
Performance |
| Timeline |
| Consol Energy |
| Harmony Gold Mining |
Consol Energy and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and Harmony Gold
The main advantage of trading using opposite Consol Energy and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy 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.| Consol Energy vs. Alliance Resource Partners | Consol Energy vs. Natural Resource Partners | Consol Energy vs. Hallador Energy | Consol Energy vs. NACCO Industries |
| Harmony Gold vs. AngloGold Ashanti plc | Harmony Gold vs. Eldorado Gold Corp | Harmony Gold vs. Kinross Gold | Harmony Gold vs. Pan American Silver |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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