Correlation Between Anglo Asian and Bankers Investment
Can any of the company-specific risk be diversified away by investing in both Anglo Asian and Bankers Investment 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 Anglo Asian and Bankers Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anglo Asian Mining and Bankers Investment Trust, you can compare the effects of market volatilities on Anglo Asian and Bankers Investment 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 Anglo Asian with a short position of Bankers Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo Asian and Bankers Investment.
Diversification Opportunities for Anglo Asian and Bankers Investment
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Anglo and Bankers is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Anglo Asian Mining and Bankers Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankers Investment Trust and Anglo Asian 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 Anglo Asian Mining are associated (or correlated) with Bankers Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankers Investment Trust has no effect on the direction of Anglo Asian i.e., Anglo Asian and Bankers Investment go up and down completely randomly.
Pair Corralation between Anglo Asian and Bankers Investment
Assuming the 90 days trading horizon Anglo Asian Mining is expected to generate 4.31 times more return on investment than Bankers Investment. However, Anglo Asian is 4.31 times more volatile than Bankers Investment Trust. It trades about 0.08 of its potential returns per unit of risk. Bankers Investment Trust is currently generating about 0.09 per unit of risk. If you would invest 6,250 in Anglo Asian Mining on October 29, 2024 and sell it today you would earn a total of 4,750 from holding Anglo Asian Mining or generate 76.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anglo Asian Mining vs. Bankers Investment Trust
Performance |
| Timeline |
| Anglo Asian Mining |
| Bankers Investment Trust |
Anglo Asian and Bankers Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo Asian and Bankers Investment
The main advantage of trading using opposite Anglo Asian and Bankers Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo Asian position performs unexpectedly, Bankers Investment 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 Bankers Investment will offset losses from the drop in Bankers Investment's long position.| Anglo Asian vs. Gruppo MutuiOnline SpA | Anglo Asian vs. SBM Offshore NV | Anglo Asian vs. Dalata Hotel Group | Anglo Asian vs. Melia Hotels |
| Bankers Investment vs. JD Sports Fashion | Bankers Investment vs. Gamma Communications PLC | Bankers Investment vs. Cairo Communication SpA | Bankers Investment vs. Aeorema Communications Plc |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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