Correlation Between Anglo American and Oando PLC
Can any of the company-specific risk be diversified away by investing in both Anglo American and Oando PLC 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 Oando PLC 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 Oando PLC, you can compare the effects of market volatilities on Anglo American and Oando PLC 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 Oando PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Oando PLC.
Diversification Opportunities for Anglo American and Oando PLC
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Anglo and Oando is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American PLC and Oando PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oando PLC 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 Oando PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oando PLC has no effect on the direction of Anglo American i.e., Anglo American and Oando PLC go up and down completely randomly.
Pair Corralation between Anglo American and Oando PLC
Assuming the 90 days trading horizon Anglo American PLC is expected to under-perform the Oando PLC. But the stock apears to be less risky and, when comparing its historical volatility, Anglo American PLC is 8.09 times less risky than Oando PLC. The stock trades about -0.01 of its potential returns per unit of risk. The Oando PLC is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,100 in Oando PLC on August 31, 2024 and sell it today you would earn a total of 900.00 from holding Oando PLC or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Anglo American PLC vs. Oando PLC
Performance |
| Timeline |
| Anglo American PLC |
| Oando PLC |
Anglo American and Oando PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Oando PLC
The main advantage of trading using opposite Anglo American and Oando PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Oando PLC 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 Oando PLC will offset losses from the drop in Oando PLC's long position.| Anglo American vs. Glencore PLC | Anglo American vs. South32 | Anglo American vs. Wesizwe | Anglo American vs. Kore Potash Plc |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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