Correlation Between African Media and Anglo American
Can any of the company-specific risk be diversified away by investing in both African Media and Anglo American 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 African Media and Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between African Media Entertainment and Anglo American PLC, you can compare the effects of market volatilities on African Media and Anglo American 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 African Media with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Media and Anglo American.
Diversification Opportunities for African Media and Anglo American
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between African and Anglo is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment and Anglo American PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American PLC and African Media 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 African Media Entertainment are associated (or correlated) with Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American PLC has no effect on the direction of African Media i.e., African Media and Anglo American go up and down completely randomly.
Pair Corralation between African Media and Anglo American
Assuming the 90 days trading horizon African Media Entertainment is expected to under-perform the Anglo American. In addition to that, African Media is 1.68 times more volatile than Anglo American PLC. It trades about -0.04 of its total potential returns per unit of risk. Anglo American PLC is currently generating about 0.15 per unit of volatility. If you would invest 5,522,500 in Anglo American PLC on September 4, 2024 and sell it today you would earn a total of 361,900 from holding Anglo American PLC or generate 6.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
African Media Entertainment vs. Anglo American PLC
Performance |
| Timeline |
| African Media Entert |
| Anglo American PLC |
African Media and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Media and Anglo American
The main advantage of trading using opposite African Media and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Media position performs unexpectedly, Anglo American 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 Anglo American will offset losses from the drop in Anglo American's long position.| African Media vs. Sasol Ltd Bee | African Media vs. Centaur Bci Balanced | African Media vs. Sabvest Capital | African Media vs. Growthpoint Properties |
| Anglo American vs. Harmony Gold Mining | Anglo American vs. African Media Entertainment | Anglo American vs. ABSA Bank Limited | Anglo American vs. HomeChoice Investments |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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