Correlation Between AngloGold Ashanti and ABSA Bank
Can any of the company-specific risk be diversified away by investing in both AngloGold Ashanti and ABSA Bank 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 AngloGold Ashanti and ABSA Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AngloGold Ashanti and ABSA Bank Limited, you can compare the effects of market volatilities on AngloGold Ashanti and ABSA Bank 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 AngloGold Ashanti with a short position of ABSA Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and ABSA Bank.
Diversification Opportunities for AngloGold Ashanti and ABSA Bank
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AngloGold and ABSA is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti and ABSA Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABSA Bank Limited and AngloGold Ashanti 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 AngloGold Ashanti are associated (or correlated) with ABSA Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABSA Bank Limited has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and ABSA Bank go up and down completely randomly.
Pair Corralation between AngloGold Ashanti and ABSA Bank
Assuming the 90 days trading horizon AngloGold Ashanti is expected to generate 2.37 times more return on investment than ABSA Bank. However, AngloGold Ashanti is 2.37 times more volatile than ABSA Bank Limited. It trades about 0.06 of its potential returns per unit of risk. ABSA Bank Limited is currently generating about 0.07 per unit of risk. If you would invest 3,325,546 in AngloGold Ashanti on September 2, 2024 and sell it today you would earn a total of 1,196,454 from holding AngloGold Ashanti or generate 35.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AngloGold Ashanti vs. ABSA Bank Limited
Performance |
| Timeline |
| AngloGold Ashanti |
| ABSA Bank Limited |
AngloGold Ashanti and ABSA Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AngloGold Ashanti and ABSA Bank
The main advantage of trading using opposite AngloGold Ashanti and ABSA Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AngloGold Ashanti position performs unexpectedly, ABSA Bank 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 ABSA Bank will offset losses from the drop in ABSA Bank's long position.| AngloGold Ashanti vs. ABSA Bank Limited | AngloGold Ashanti vs. Safari Investments RSA | AngloGold Ashanti vs. Zeder Investments | AngloGold Ashanti vs. eMedia Holdings Limited |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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