Correlation Between AngloGold Ashanti and HomeChoice Investments
Can any of the company-specific risk be diversified away by investing in both AngloGold Ashanti and HomeChoice Investments 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 HomeChoice Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AngloGold Ashanti and HomeChoice Investments, you can compare the effects of market volatilities on AngloGold Ashanti and HomeChoice Investments 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 HomeChoice Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and HomeChoice Investments.
Diversification Opportunities for AngloGold Ashanti and HomeChoice Investments
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AngloGold and HomeChoice is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti and HomeChoice Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeChoice Investments 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 HomeChoice Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeChoice Investments has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and HomeChoice Investments go up and down completely randomly.
Pair Corralation between AngloGold Ashanti and HomeChoice Investments
Assuming the 90 days trading horizon AngloGold Ashanti is expected to generate 0.59 times more return on investment than HomeChoice Investments. However, AngloGold Ashanti is 1.71 times less risky than HomeChoice Investments. It trades about -0.1 of its potential returns per unit of risk. HomeChoice Investments is currently generating about -0.21 per unit of risk. If you would invest 4,807,300 in AngloGold Ashanti on September 4, 2024 and sell it today you would lose (322,300) from holding AngloGold Ashanti or give up 6.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
AngloGold Ashanti vs. HomeChoice Investments
Performance |
| Timeline |
| AngloGold Ashanti |
| HomeChoice Investments |
AngloGold Ashanti and HomeChoice Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AngloGold Ashanti and HomeChoice Investments
The main advantage of trading using opposite AngloGold Ashanti and HomeChoice Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AngloGold Ashanti position performs unexpectedly, HomeChoice Investments 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 HomeChoice Investments will offset losses from the drop in HomeChoice Investments' long position.| AngloGold Ashanti vs. HomeChoice Investments | AngloGold Ashanti vs. Safari Investments RSA | AngloGold Ashanti vs. Life Healthcare | AngloGold Ashanti vs. Frontier Transport Holdings |
| HomeChoice Investments vs. Safari Investments RSA | HomeChoice Investments vs. Astral Foods | HomeChoice Investments vs. Afine Investments | HomeChoice Investments vs. RCL Foods |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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