Correlation Between Anglo American and AfroCentric Investment
Can any of the company-specific risk be diversified away by investing in both Anglo American and AfroCentric Investment 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 AfroCentric Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anglo American Platinum and AfroCentric Investment Corp, you can compare the effects of market volatilities on Anglo American and AfroCentric Investment 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 AfroCentric Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and AfroCentric Investment.
Diversification Opportunities for Anglo American and AfroCentric Investment
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Anglo and AfroCentric is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American Platinum and AfroCentric Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfroCentric Investment 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 Platinum are associated (or correlated) with AfroCentric Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfroCentric Investment has no effect on the direction of Anglo American i.e., Anglo American and AfroCentric Investment go up and down completely randomly.
Pair Corralation between Anglo American and AfroCentric Investment
Assuming the 90 days trading horizon Anglo American Platinum is expected to under-perform the AfroCentric Investment. But the stock apears to be less risky and, when comparing its historical volatility, Anglo American Platinum is 1.23 times less risky than AfroCentric Investment. The stock trades about -0.04 of its potential returns per unit of risk. The AfroCentric Investment Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 50,600 in AfroCentric Investment Corp on August 28, 2024 and sell it today you would lose (29,700) from holding AfroCentric Investment Corp or give up 58.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anglo American Platinum vs. AfroCentric Investment Corp
Performance |
| Timeline |
| Anglo American Platinum |
| AfroCentric Investment |
Anglo American and AfroCentric Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and AfroCentric Investment
The main advantage of trading using opposite Anglo American and AfroCentric Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, AfroCentric Investment 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 AfroCentric Investment will offset losses from the drop in AfroCentric Investment's long position.| Anglo American vs. CA Sales Holdings | Anglo American vs. Life Healthcare | Anglo American vs. Afine Investments | Anglo American vs. E Media Holdings |
| AfroCentric Investment vs. Life Healthcare | AfroCentric Investment vs. Centaur Bci Balanced | AfroCentric Investment vs. Growthpoint Properties | AfroCentric Investment vs. Bowler Metcalf |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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