Correlation Between Anglo Asian and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Anglo Asian and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining, you can compare the effects of market volatilities on Anglo Asian and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo Asian and Caledonia Mining.
Diversification Opportunities for Anglo Asian and Caledonia Mining
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Anglo and Caledonia is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Anglo Asian Mining and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Anglo Asian i.e., Anglo Asian and Caledonia Mining go up and down completely randomly.
Pair Corralation between Anglo Asian and Caledonia Mining
Assuming the 90 days trading horizon Anglo Asian Mining is expected to generate 2.31 times more return on investment than Caledonia Mining. However, Anglo Asian is 2.31 times more volatile than Caledonia Mining. It trades about 0.09 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.03 per unit of risk. If you would invest 10,400 in Anglo Asian Mining on November 3, 2024 and sell it today you would earn a total of 500.00 from holding Anglo Asian Mining or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anglo Asian Mining vs. Caledonia Mining
Performance |
| Timeline |
| Anglo Asian Mining |
| Caledonia Mining |
Anglo Asian and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo Asian and Caledonia Mining
The main advantage of trading using opposite Anglo Asian and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo Asian position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Anglo Asian vs. GreenX Metals | Anglo Asian vs. Global Net Lease | Anglo Asian vs. Ebro Foods | Anglo Asian vs. National Beverage Corp |
| Caledonia Mining vs. AMG Advanced Metallurgical | Caledonia Mining vs. First Class Metals | Caledonia Mining vs. Silvercorp Metals | Caledonia Mining vs. Science in Sport |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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