Correlation Between Harmony Gold and Sibanye Gold
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Sibanye 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 Sibanye 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 Sibanye Gold Ltd, you can compare the effects of market volatilities on Harmony Gold and Sibanye 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 Sibanye Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Sibanye Gold.
Diversification Opportunities for Harmony Gold and Sibanye Gold
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harmony and Sibanye is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Sibanye Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sibanye 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 Sibanye Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sibanye Gold has no effect on the direction of Harmony Gold i.e., Harmony Gold and Sibanye Gold go up and down completely randomly.
Pair Corralation between Harmony Gold and Sibanye Gold
Considering the 90-day investment horizon Harmony Gold Mining is expected to generate 0.89 times more return on investment than Sibanye Gold. However, Harmony Gold Mining is 1.13 times less risky than Sibanye Gold. It trades about 0.08 of its potential returns per unit of risk. Sibanye Gold Ltd is currently generating about -0.01 per unit of risk. If you would invest 401.00 in Harmony Gold Mining on August 28, 2024 and sell it today you would earn a total of 519.00 from holding Harmony Gold Mining or generate 129.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Sibanye Gold Ltd
Performance |
| Timeline |
| Harmony Gold Mining |
| Sibanye Gold |
Harmony Gold and Sibanye Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Sibanye Gold
The main advantage of trading using opposite Harmony Gold and Sibanye Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Sibanye 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 Sibanye Gold will offset losses from the drop in Sibanye Gold's long position.The idea behind Harmony Gold Mining and Sibanye Gold Ltd 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.| Sibanye Gold vs. AngloGold Ashanti plc | Sibanye Gold vs. Harmony Gold Mining | Sibanye Gold vs. Eldorado Gold Corp | Sibanye Gold vs. Kinross Gold |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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