Correlation Between GoldMining and Anglo-Eastern Plantations
Can any of the company-specific risk be diversified away by investing in both GoldMining and Anglo-Eastern Plantations 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 GoldMining and Anglo-Eastern Plantations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Anglo Eastern Plantations PLC, you can compare the effects of market volatilities on GoldMining and Anglo-Eastern Plantations 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 GoldMining with a short position of Anglo-Eastern Plantations. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Anglo-Eastern Plantations.
Diversification Opportunities for GoldMining and Anglo-Eastern Plantations
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GoldMining and Anglo-Eastern is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Anglo Eastern Plantations PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo-Eastern Plantations and GoldMining 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 GoldMining are associated (or correlated) with Anglo-Eastern Plantations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo-Eastern Plantations has no effect on the direction of GoldMining i.e., GoldMining and Anglo-Eastern Plantations go up and down completely randomly.
Pair Corralation between GoldMining and Anglo-Eastern Plantations
Assuming the 90 days trading horizon GoldMining is expected to under-perform the Anglo-Eastern Plantations. In addition to that, GoldMining is 1.86 times more volatile than Anglo Eastern Plantations PLC. It trades about -0.03 of its total potential returns per unit of risk. Anglo Eastern Plantations PLC is currently generating about 0.11 per unit of volatility. If you would invest 61,200 in Anglo Eastern Plantations PLC on August 30, 2024 and sell it today you would earn a total of 4,800 from holding Anglo Eastern Plantations PLC or generate 7.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 65.91% |
| Values | Daily Returns |
GoldMining vs. Anglo Eastern Plantations PLC
Performance |
| Timeline |
| GoldMining |
| Anglo-Eastern Plantations |
GoldMining and Anglo-Eastern Plantations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Anglo-Eastern Plantations
The main advantage of trading using opposite GoldMining and Anglo-Eastern Plantations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Anglo-Eastern Plantations 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 Anglo-Eastern Plantations will offset losses from the drop in Anglo-Eastern Plantations' long position.| GoldMining vs. Ross Stores | GoldMining vs. Zoom Video Communications | GoldMining vs. Cairo Communication SpA | GoldMining vs. Dalata Hotel Group |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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