Correlation Between Anglo Asian and Cornish Metals
Can any of the company-specific risk be diversified away by investing in both Anglo Asian and Cornish Metals 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 Cornish Metals 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 Cornish Metals, you can compare the effects of market volatilities on Anglo Asian and Cornish Metals 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 Cornish Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo Asian and Cornish Metals.
Diversification Opportunities for Anglo Asian and Cornish Metals
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Anglo and Cornish is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Anglo Asian Mining and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals 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 Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of Anglo Asian i.e., Anglo Asian and Cornish Metals go up and down completely randomly.
Pair Corralation between Anglo Asian and Cornish Metals
Assuming the 90 days trading horizon Anglo Asian Mining is expected to generate 1.11 times more return on investment than Cornish Metals. However, Anglo Asian is 1.11 times more volatile than Cornish Metals. It trades about 0.03 of its potential returns per unit of risk. Cornish Metals is currently generating about -0.01 per unit of risk. If you would invest 8,102 in Anglo Asian Mining on September 2, 2024 and sell it today you would earn a total of 2,048 from holding Anglo Asian Mining or generate 25.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anglo Asian Mining vs. Cornish Metals
Performance |
| Timeline |
| Anglo Asian Mining |
| Cornish Metals |
Anglo Asian and Cornish Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo Asian and Cornish Metals
The main advantage of trading using opposite Anglo Asian and Cornish Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo Asian position performs unexpectedly, Cornish Metals 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 Cornish Metals will offset losses from the drop in Cornish Metals' long position.| Anglo Asian vs. Automatic Data Processing | Anglo Asian vs. Datagroup SE | Anglo Asian vs. Applied Materials | Anglo Asian vs. Compagnie Plastic Omnium |
| Cornish Metals vs. Givaudan SA | Cornish Metals vs. Antofagasta PLC | Cornish Metals vs. Centamin PLC | Cornish Metals vs. Atalaya Mining |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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