Correlation Between Harmony Gold and St James
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and St James 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 St James 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 St James Gold, you can compare the effects of market volatilities on Harmony Gold and St James 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 St James. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and St James.
Diversification Opportunities for Harmony Gold and St James
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Harmony and LRDJF is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and St James Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St James 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 St James. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St James Gold has no effect on the direction of Harmony Gold i.e., Harmony Gold and St James go up and down completely randomly.
Pair Corralation between Harmony Gold and St James
Considering the 90-day investment horizon Harmony Gold is expected to generate 55.02 times less return on investment than St James. But when comparing it to its historical volatility, Harmony Gold Mining is 3.36 times less risky than St James. It trades about 0.0 of its potential returns per unit of risk. St James Gold is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7.44 in St James Gold on September 12, 2024 and sell it today you would lose (0.24) from holding St James Gold or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Harmony Gold Mining vs. St James Gold
Performance |
| Timeline |
| Harmony Gold Mining |
| St James Gold |
Harmony Gold and St James Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and St James
The main advantage of trading using opposite Harmony Gold and St James positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, St James 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 St James will offset losses from the drop in St James' 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 |
| St James vs. Puma Exploration | St James vs. Sixty North Gold | St James vs. Red Pine Exploration | St James vs. Grande Portage 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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