Correlation Between Anglo American and Astral Foods
Can any of the company-specific risk be diversified away by investing in both Anglo American and Astral Foods 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 American and Astral Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anglo American PLC and Astral Foods, you can compare the effects of market volatilities on Anglo American and Astral Foods 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 American with a short position of Astral Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Astral Foods.
Diversification Opportunities for Anglo American and Astral Foods
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Anglo and Astral is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American PLC and Astral Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astral Foods and Anglo American 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 American PLC are associated (or correlated) with Astral Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astral Foods has no effect on the direction of Anglo American i.e., Anglo American and Astral Foods go up and down completely randomly.
Pair Corralation between Anglo American and Astral Foods
Assuming the 90 days trading horizon Anglo American is expected to generate 2.72 times less return on investment than Astral Foods. In addition to that, Anglo American is 1.26 times more volatile than Astral Foods. It trades about 0.09 of its total potential returns per unit of risk. Astral Foods is currently generating about 0.3 per unit of volatility. If you would invest 1,718,100 in Astral Foods on September 2, 2024 and sell it today you would earn a total of 181,900 from holding Astral Foods or generate 10.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anglo American PLC vs. Astral Foods
Performance |
| Timeline |
| Anglo American PLC |
| Astral Foods |
Anglo American and Astral Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Astral Foods
The main advantage of trading using opposite Anglo American and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Astral Foods 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 Astral Foods will offset losses from the drop in Astral Foods' long position.| Anglo American vs. ABSA Bank Limited | Anglo American vs. Copper 360 | Anglo American vs. Safari Investments RSA | Anglo American vs. Allied Electronics |
| Astral Foods vs. Prosus NV | Astral Foods vs. British American Tobacco | Astral Foods vs. Glencore PLC | Astral Foods vs. Anglo American 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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