Correlation Between Harmony Gold and Eloro Resources
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Eloro Resources 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 Eloro Resources 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 Eloro Resources, you can compare the effects of market volatilities on Harmony Gold and Eloro Resources 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 Eloro Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Eloro Resources.
Diversification Opportunities for Harmony Gold and Eloro Resources
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harmony and Eloro is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Eloro Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eloro Resources 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 Eloro Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eloro Resources has no effect on the direction of Harmony Gold i.e., Harmony Gold and Eloro Resources go up and down completely randomly.
Pair Corralation between Harmony Gold and Eloro Resources
Considering the 90-day investment horizon Harmony Gold Mining is expected to under-perform the Eloro Resources. But the stock apears to be less risky and, when comparing its historical volatility, Harmony Gold Mining is 1.67 times less risky than Eloro Resources. The stock trades about -0.22 of its potential returns per unit of risk. The Eloro Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 72.00 in Eloro Resources on September 4, 2024 and sell it today you would earn a total of 1.00 from holding Eloro Resources or generate 1.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Harmony Gold Mining vs. Eloro Resources
Performance |
| Timeline |
| Harmony Gold Mining |
| Eloro Resources |
Harmony Gold and Eloro Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Eloro Resources
The main advantage of trading using opposite Harmony Gold and Eloro Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Eloro Resources 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 Eloro Resources will offset losses from the drop in Eloro Resources' long position.| Harmony Gold vs. AngloGold Ashanti plc | Harmony Gold vs. Eldorado Gold Corp | Harmony Gold vs. Kinross Gold | Harmony Gold vs. Pan American Silver |
| Eloro Resources vs. Labrador Gold Corp | Eloro Resources vs. Lion One Metals | Eloro Resources vs. Novo Resources Corp | Eloro Resources vs. Irving Resources |
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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