Correlation Between Harmony Gold and ESGL Holdings
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and ESGL Holdings 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 ESGL Holdings 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 ESGL Holdings Limited, you can compare the effects of market volatilities on Harmony Gold and ESGL Holdings 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 ESGL Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and ESGL Holdings.
Diversification Opportunities for Harmony Gold and ESGL Holdings
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Harmony and ESGL is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and ESGL Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESGL Holdings Limited 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 ESGL Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESGL Holdings Limited has no effect on the direction of Harmony Gold i.e., Harmony Gold and ESGL Holdings go up and down completely randomly.
Pair Corralation between Harmony Gold and ESGL Holdings
Considering the 90-day investment horizon Harmony Gold is expected to generate 184.37 times less return on investment than ESGL Holdings. But when comparing it to its historical volatility, Harmony Gold Mining is 67.18 times less risky than ESGL Holdings. It trades about 0.08 of its potential returns per unit of risk. ESGL Holdings Limited is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 15,750 in ESGL Holdings Limited on August 27, 2024 and sell it today you would lose (15,748) from holding ESGL Holdings Limited or give up 99.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 85.08% |
| Values | Daily Returns |
Harmony Gold Mining vs. ESGL Holdings Limited
Performance |
| Timeline |
| Harmony Gold Mining |
| ESGL Holdings Limited |
Harmony Gold and ESGL Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and ESGL Holdings
The main advantage of trading using opposite Harmony Gold and ESGL Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, ESGL Holdings 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 ESGL Holdings will offset losses from the drop in ESGL Holdings' long position.The idea behind Harmony Gold Mining and ESGL Holdings Limited 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.| ESGL Holdings vs. Harmony Gold Mining | ESGL Holdings vs. KNOT Offshore Partners | ESGL Holdings vs. Seadrill Limited | ESGL Holdings vs. Parker Hannifin |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |