Correlation Between Harmony Gold and Gold Road

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

Diversification Opportunities for Harmony Gold and Gold Road

0.05

Correlation Coefficient

Harmony Gold  Gold Road

Significant diversification

The 3 months correlation between Harmony and Gold is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Harmony Gold i.e., Harmony Gold and Gold Road go up and down completely randomly.

Pair Corralation between Harmony Gold and Gold Road

Assuming the 90 days horizon Harmony Gold Mining is expected to under-perform the Gold Road. In addition to that, Harmony Gold is 1.71 times more volatile than Gold Road Resources. It trades about -0.09 of its total potential returns per unit of risk. Gold Road Resources is currently generating about -0.04 per unit of volatility. If you would invest  188.00  in Gold Road Resources on April 20, 2025 and sell it today you would lose (12.00) from holding Gold Road Resources or give up 6.38% of portfolio value over 90 days.

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

Harmony Gold Mining  vs.  Gold Road Resources

Harmony Gold Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harmony Gold Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Gold Road Resources

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Harmony Gold and Gold Road

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

The idea behind Harmony Gold Mining and Gold Road Resources 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.