Correlation Between Anglo Asian and Power Metal
Can any of the company-specific risk be diversified away by investing in both Anglo Asian and Power 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 Power 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 Power Metal Resources, you can compare the effects of market volatilities on Anglo Asian and Power 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 Power Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo Asian and Power Metal.
Diversification Opportunities for Anglo Asian and Power Metal
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Anglo and Power is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Anglo Asian Mining and Power Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power 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 Power Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Metal Resources has no effect on the direction of Anglo Asian i.e., Anglo Asian and Power Metal go up and down completely randomly.
Pair Corralation between Anglo Asian and Power Metal
Assuming the 90 days trading horizon Anglo Asian Mining is expected to under-perform the Power Metal. But the stock apears to be less risky and, when comparing its historical volatility, Anglo Asian Mining is 1.91 times less risky than Power Metal. The stock trades about -0.24 of its potential returns per unit of risk. The Power Metal Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,300 in Power Metal Resources on August 31, 2024 and sell it today you would earn a total of 113.00 from holding Power Metal Resources or generate 8.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Anglo Asian Mining vs. Power Metal Resources
Performance |
| Timeline |
| Anglo Asian Mining |
| Power Metal Resources |
Anglo Asian and Power Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo Asian and Power Metal
The main advantage of trading using opposite Anglo Asian and Power Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo Asian position performs unexpectedly, Power 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 Power Metal will offset losses from the drop in Power 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 |
| Power Metal vs. Hollywood Bowl Group | Power Metal vs. Centaur Media | Power Metal vs. Air Products Chemicals | Power Metal vs. Ecclesiastical Insurance Office |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |