Correlation Between Harmony Gold and Sandstorm Gold
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Sandstorm 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 Harmony Gold and Sandstorm Gold 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 Sandstorm Gold Ltd, you can compare the effects of market volatilities on Harmony Gold and Sandstorm 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 Harmony Gold with a short position of Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Sandstorm Gold.
Diversification Opportunities for Harmony Gold and Sandstorm Gold
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Harmony and Sandstorm is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold 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 Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of Harmony Gold i.e., Harmony Gold and Sandstorm Gold go up and down completely randomly.
Pair Corralation between Harmony Gold and Sandstorm Gold
Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the Sandstorm Gold. In addition to that, Harmony Gold is 1.61 times more volatile than Sandstorm Gold Ltd. It trades about -0.22 of its total potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about -0.06 per unit of volatility. If you would invest 605.00 in Sandstorm Gold Ltd on September 1, 2024 and sell it today you would lose (26.00) from holding Sandstorm Gold Ltd or give up 4.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Sandstorm Gold Ltd
Performance |
| Timeline |
| Harmony Gold Mining |
| Sandstorm Gold |
Harmony Gold and Sandstorm Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Sandstorm Gold
The main advantage of trading using opposite Harmony Gold and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Sandstorm 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 Sandstorm Gold will offset losses from the drop in Sandstorm Gold's long position.| Harmony Gold vs. Aurion Resources | Harmony Gold vs. Rio2 Limited | Harmony Gold vs. Palamina Corp | Harmony Gold vs. BTU Metals Corp |
| Sandstorm Gold vs. Fortitude Gold Corp | Sandstorm Gold vs. New Gold | Sandstorm Gold vs. Galiano Gold | Sandstorm Gold vs. GoldMining |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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