Correlation Between Gold Fields and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Gold Fields 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 Gold Fields and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Fields Ltd and Harmony Gold Mining, you can compare the effects of market volatilities on Gold Fields 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 Gold Fields with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Harmony Gold.
Diversification Opportunities for Gold Fields and Harmony Gold
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gold and Harmony is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd 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 Gold Fields 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 Gold Fields Ltd 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 Gold Fields i.e., Gold Fields and Harmony Gold go up and down completely randomly.
Pair Corralation between Gold Fields and Harmony Gold
Assuming the 90 days trading horizon Gold Fields is expected to generate 1.02 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Gold Fields Ltd is 1.24 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 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,197,500 in Harmony Gold Mining on November 2, 2024 and sell it today you would earn a total of 140,000 from holding Harmony Gold Mining or generate 11.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. Harmony Gold Mining
Performance |
| Timeline |
| Gold Fields |
| Harmony Gold Mining |
Gold Fields and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Harmony Gold
The main advantage of trading using opposite Gold Fields and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields 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.| Gold Fields vs. Agrometal SAI | Gold Fields vs. United States Steel | Gold Fields vs. Capex SA | Gold Fields vs. Pfizer Inc |
| Harmony Gold vs. Telecom Argentina | Harmony Gold vs. Transportadora de Gas | Harmony Gold vs. Agrometal SAI |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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