Correlation Between Harmony Gold and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Southern Copper 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 Southern Copper 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 Southern Copper, you can compare the effects of market volatilities on Harmony Gold and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Southern Copper.
Diversification Opportunities for Harmony Gold and Southern Copper
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harmony and Southern is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of Harmony Gold i.e., Harmony Gold and Southern Copper go up and down completely randomly.
Pair Corralation between Harmony Gold and Southern Copper
Considering the 90-day investment horizon Harmony Gold Mining is expected to under-perform the Southern Copper. In addition to that, Harmony Gold is 1.51 times more volatile than Southern Copper. It trades about -0.27 of its total potential returns per unit of risk. Southern Copper is currently generating about -0.19 per unit of volatility. If you would invest 11,048 in Southern Copper on August 31, 2024 and sell it today you would lose (1,077) from holding Southern Copper or give up 9.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Southern Copper
Performance |
| Timeline |
| Harmony Gold Mining |
| Southern Copper |
Harmony Gold and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Southern Copper
The main advantage of trading using opposite Harmony Gold and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's 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 |
| Southern Copper vs. Ero Copper Corp | Southern Copper vs. Hudbay Minerals | Southern Copper vs. Taseko Mines | Southern Copper vs. Amerigo 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 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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