Correlation Between Kumba Iron and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and Harmony 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 Kumba Iron and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kumba Iron Ore and Harmony Gold Mining, you can compare the effects of market volatilities on Kumba Iron and Harmony 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 Kumba Iron with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and Harmony Gold.
Diversification Opportunities for Kumba Iron and Harmony Gold
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kumba and Harmony is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining and Kumba Iron 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 Kumba Iron Ore are associated (or correlated) with Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Kumba Iron i.e., Kumba Iron and Harmony Gold go up and down completely randomly.
Pair Corralation between Kumba Iron and Harmony Gold
Assuming the 90 days trading horizon Kumba Iron Ore is expected to under-perform the Harmony Gold. But the stock apears to be less risky and, when comparing its historical volatility, Kumba Iron Ore is 1.21 times less risky than Harmony Gold. The stock trades about -0.02 of its potential returns per unit of risk. The Harmony Gold Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 674,000 in Harmony Gold Mining on August 28, 2024 and sell it today you would earn a total of 1,000,100 from holding Harmony Gold Mining or generate 148.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumba Iron Ore vs. Harmony Gold Mining
Performance |
| Timeline |
| Kumba Iron Ore |
| Harmony Gold Mining |
Kumba Iron and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumba Iron and Harmony Gold
The main advantage of trading using opposite Kumba Iron and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, Harmony 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| Kumba Iron vs. Ascendis Health | Kumba Iron vs. eMedia Holdings Limited | Kumba Iron vs. Hosken Consolidated Investments | Kumba Iron vs. Zeder Investments |
| Harmony Gold vs. CA Sales Holdings | Harmony Gold vs. Deneb Investments | Harmony Gold vs. Afine Investments | Harmony Gold vs. Frontier Transport Holdings |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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