Correlation Between Harmony Gold and Tsogo Sun
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Tsogo Sun 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 Harmony Gold and Tsogo Sun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harmony Gold Mining and Tsogo Sun, you can compare the effects of market volatilities on Harmony Gold and Tsogo Sun 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 Harmony Gold with a short position of Tsogo Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Tsogo Sun.
Diversification Opportunities for Harmony Gold and Tsogo Sun
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Harmony and Tsogo is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Tsogo Sun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsogo Sun and Harmony Gold 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 Harmony Gold Mining are associated (or correlated) with Tsogo Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsogo Sun has no effect on the direction of Harmony Gold i.e., Harmony Gold and Tsogo Sun go up and down completely randomly.
Pair Corralation between Harmony Gold and Tsogo Sun
Assuming the 90 days trading horizon Harmony Gold Mining is expected to generate 1.39 times more return on investment than Tsogo Sun. However, Harmony Gold is 1.39 times more volatile than Tsogo Sun. It trades about -0.03 of its potential returns per unit of risk. Tsogo Sun is currently generating about -0.26 per unit of risk. If you would invest 1,742,000 in Harmony Gold Mining on September 12, 2024 and sell it today you would lose (50,900) from holding Harmony Gold Mining or give up 2.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Tsogo Sun
Performance |
| Timeline |
| Harmony Gold Mining |
| Tsogo Sun |
Harmony Gold and Tsogo Sun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Tsogo Sun
The main advantage of trading using opposite Harmony Gold and Tsogo Sun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Tsogo Sun 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 Tsogo Sun will offset losses from the drop in Tsogo Sun's long position.| Harmony Gold vs. Frontier Transport Holdings | Harmony Gold vs. British American Tobacco | Harmony Gold vs. Master Drilling Group | Harmony Gold vs. MC Mining |
| Tsogo Sun vs. Advtech | Tsogo Sun vs. Standard Bank Group | Tsogo Sun vs. Safari Investments RSA | Tsogo Sun vs. MC Mining |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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