Correlation Between Harmony Gold and Tianjin Capital

Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Tianjin Capital 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 Tianjin Capital 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 Tianjin Capital Environmental, you can compare the effects of market volatilities on Harmony Gold and Tianjin Capital 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 Tianjin Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Tianjin Capital.

Diversification Opportunities for Harmony Gold and Tianjin Capital

0.0

Correlation Coefficient

Harmony Gold  Tianjin Capital

Pay attention - limited upside

The 3 months correlation between Harmony and Tianjin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi 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 Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of Harmony Gold i.e., Harmony Gold and Tianjin Capital go up and down completely randomly.

Pair Corralation between Harmony Gold and Tianjin Capital

Assuming the 90 days horizon Harmony Gold Mining is expected to generate 1.87 times more return on investment than Tianjin Capital. However, Harmony Gold is 1.87 times more volatile than Tianjin Capital Environmental. It trades about 0.07 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about 0.02 per unit of risk. If you would invest  283.00  in Harmony Gold Mining on February 21, 2024 and sell it today you would earn a total of  617.00  from holding Harmony Gold Mining or generate 218.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	79.44%
Values	Daily Returns

Harmony Gold Mining  vs.  Tianjin Capital Environmental

Harmony Gold Mining

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Harmony Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Tianjin Capital Envi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tianjin Capital Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Tianjin Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Harmony Gold and Tianjin Capital

The main advantage of trading using opposite Harmony Gold and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Tianjin Capital 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 Tianjin Capital will offset losses from the drop in Tianjin Capital's long position.

The idea behind Harmony Gold Mining and Tianjin Capital Environmental 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.