Correlation Between Sotherly Hotels and Harmony Gold

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

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

Diversification Opportunities for Sotherly Hotels and Harmony Gold

-0.77

Correlation Coefficient

Sotherly Hotels  Harmony Gold

Pay attention - limited upside

The 3 months correlation between Sotherly and Harmony is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sotherly Hotels 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 Sotherly Hotels 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 Sotherly Hotels 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 Sotherly Hotels i.e., Sotherly Hotels and Harmony Gold go up and down completely randomly.

Pair Corralation between Sotherly Hotels and Harmony Gold

Assuming the 90 days horizon Sotherly Hotels is expected to generate 1.06 times more return on investment than Harmony Gold. However, Sotherly Hotels is 1.06 times more volatile than Harmony Gold Mining. It trades about 0.09 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.08 per unit of risk. If you would invest  60.00  in Sotherly Hotels on April 21, 2025 and sell it today you would earn a total of  12.00  from holding Sotherly Hotels or generate 20.0% return on investment over 90 days.

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

Sotherly Hotels  vs.  Harmony Gold Mining

Sotherly Hotels

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sotherly Hotels are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sotherly Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Sotherly Hotels and Harmony Gold

The main advantage of trading using opposite Sotherly Hotels and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotherly Hotels 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 Sotherly Hotels 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.