Correlation Between Anglo Asian and Golden Metal
Can any of the company-specific risk be diversified away by investing in both Anglo Asian and Golden Metal 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 Golden Metal 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 Golden Metal Resources, you can compare the effects of market volatilities on Anglo Asian and Golden Metal 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 Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo Asian and Golden Metal.
Diversification Opportunities for Anglo Asian and Golden Metal
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Anglo and Golden is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Anglo Asian Mining and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources 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 Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Anglo Asian i.e., Anglo Asian and Golden Metal go up and down completely randomly.
Pair Corralation between Anglo Asian and Golden Metal
Assuming the 90 days trading horizon Anglo Asian is expected to generate 23.65 times less return on investment than Golden Metal. But when comparing it to its historical volatility, Anglo Asian Mining is 11.69 times less risky than Golden Metal. It trades about 0.03 of its potential returns per unit of risk. Golden Metal Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Golden Metal Resources on August 31, 2024 and sell it today you would earn a total of 3,091 from holding Golden Metal Resources or generate 34344.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.12% |
| Values | Daily Returns |
Anglo Asian Mining vs. Golden Metal Resources
Performance |
| Timeline |
| Anglo Asian Mining |
| Golden Metal Resources |
Anglo Asian and Golden Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo Asian and Golden Metal
The main advantage of trading using opposite Anglo Asian and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo Asian position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal's long position.| Anglo Asian vs. Automatic Data Processing | Anglo Asian vs. Gear4music Plc | Anglo Asian vs. Grieg Seafood | Anglo Asian vs. Extra Space Storage |
| Golden Metal vs. Bankers Investment Trust | Golden Metal vs. Oakley Capital Investments | Golden Metal vs. Federal Realty Investment | Golden Metal vs. New Residential Investment |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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