Correlation Between Commercial Metals and Harmony Gold

Can any of the company-specific risk be diversified away by investing in both Commercial Metals 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 Commercial Metals and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Commercial Metals and Harmony Gold Mining, you can compare the effects of market volatilities on Commercial Metals 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 Commercial Metals with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Metals and Harmony Gold.

Diversification Opportunities for Commercial Metals and Harmony Gold

-0.66

Correlation Coefficient

Commercial Metals  Harmony Gold

Excellent diversification

The 3 months correlation between Commercial and Harmony is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Metals 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 Commercial Metals 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 Commercial Metals 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 Commercial Metals i.e., Commercial Metals and Harmony Gold go up and down completely randomly.

Pair Corralation between Commercial Metals and Harmony Gold

Considering the 90-day investment horizon Commercial Metals is expected to generate 7.58 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Commercial Metals is 1.63 times less risky than Harmony Gold. It trades about 0.02 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  500.00  in Harmony Gold Mining on February 1, 2025 and sell it today you would earn a total of  1,005  from holding Harmony Gold Mining or generate 201.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Commercial Metals  vs.  Harmony Gold Mining

Commercial Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commercial Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Commercial Metals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Harmony Gold Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Harmony Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commercial Metals and Harmony Gold

The main advantage of trading using opposite Commercial Metals and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Metals 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.

The idea behind Commercial Metals and Harmony Gold Mining 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 Commodity Directory module to find actively traded commodities issued by global exchanges.