Correlation Between Future Metals and Anglo Eastern
Can any of the company-specific risk be diversified away by investing in both Future Metals and Anglo Eastern 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 Future Metals and Anglo Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Future Metals NL and Anglo Eastern Plantations PLC, you can compare the effects of market volatilities on Future Metals and Anglo Eastern 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 Future Metals with a short position of Anglo Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Future Metals and Anglo Eastern.
Diversification Opportunities for Future Metals and Anglo Eastern
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Future and Anglo is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Future Metals NL and Anglo Eastern Plantations PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo Eastern Planta and Future Metals 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 Future Metals NL are associated (or correlated) with Anglo Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo Eastern Planta has no effect on the direction of Future Metals i.e., Future Metals and Anglo Eastern go up and down completely randomly.
Pair Corralation between Future Metals and Anglo Eastern
Assuming the 90 days trading horizon Future Metals NL is expected to under-perform the Anglo Eastern. In addition to that, Future Metals is 2.2 times more volatile than Anglo Eastern Plantations PLC. It trades about -0.05 of its total potential returns per unit of risk. Anglo Eastern Plantations PLC is currently generating about 0.02 per unit of volatility. If you would invest 66,600 in Anglo Eastern Plantations PLC on September 12, 2024 and sell it today you would earn a total of 800.00 from holding Anglo Eastern Plantations PLC or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Future Metals NL vs. Anglo Eastern Plantations PLC
Performance |
| Timeline |
| Future Metals NL |
| Anglo Eastern Planta |
Future Metals and Anglo Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Future Metals and Anglo Eastern
The main advantage of trading using opposite Future Metals and Anglo Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future Metals position performs unexpectedly, Anglo Eastern 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 Eastern will offset losses from the drop in Anglo Eastern's long position.| Future Metals vs. Givaudan SA | Future Metals vs. Antofagasta PLC | Future Metals vs. Ferrexpo PLC | Future Metals vs. Atalaya Mining |
| Anglo Eastern vs. McEwen Mining | Anglo Eastern vs. Vitec Software Group | Anglo Eastern vs. Litigation Capital Management | Anglo Eastern vs. Axway Software SA |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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