Correlation Between Harmony Gold and Consol Energy
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Consol Energy 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 Consol Energy 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 Consol Energy, you can compare the effects of market volatilities on Harmony Gold and Consol Energy 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 Consol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Consol Energy.
Diversification Opportunities for Harmony Gold and Consol Energy
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Harmony and Consol is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy 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 Consol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consol Energy has no effect on the direction of Harmony Gold i.e., Harmony Gold and Consol Energy go up and down completely randomly.
Pair Corralation between Harmony Gold and Consol Energy
Considering the 90-day investment horizon Harmony Gold Mining is expected to under-perform the Consol Energy. In addition to that, Harmony Gold is 1.13 times more volatile than Consol Energy. It trades about -0.24 of its total potential returns per unit of risk. Consol Energy is currently generating about 0.32 per unit of volatility. If you would invest 10,913 in Consol Energy on August 28, 2024 and sell it today you would earn a total of 2,420 from holding Consol Energy or generate 22.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Consol Energy
Performance |
| Timeline |
| Harmony Gold Mining |
| Consol Energy |
Harmony Gold and Consol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Consol Energy
The main advantage of trading using opposite Harmony Gold and Consol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Consol Energy 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 Consol Energy will offset losses from the drop in Consol Energy's long position.The idea behind Harmony Gold Mining and Consol Energy 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.| Consol Energy vs. Alliance Resource Partners | Consol Energy vs. Natural Resource Partners | Consol Energy vs. Hallador Energy | Consol Energy vs. NACCO Industries |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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