Correlation Between Glencore PLC and African Rainbow
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and African Rainbow 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 Glencore PLC and African Rainbow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glencore PLC and African Rainbow Minerals, you can compare the effects of market volatilities on Glencore PLC and African Rainbow 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 Glencore PLC with a short position of African Rainbow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and African Rainbow.
Diversification Opportunities for Glencore PLC and African Rainbow
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Glencore and African is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC and African Rainbow Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Rainbow Minerals and Glencore PLC 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 Glencore PLC are associated (or correlated) with African Rainbow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Rainbow Minerals has no effect on the direction of Glencore PLC i.e., Glencore PLC and African Rainbow go up and down completely randomly.
Pair Corralation between Glencore PLC and African Rainbow
Assuming the 90 days horizon Glencore PLC is expected to under-perform the African Rainbow. But the pink sheet apears to be less risky and, when comparing its historical volatility, Glencore PLC is 2.02 times less risky than African Rainbow. The pink sheet trades about -0.08 of its potential returns per unit of risk. The African Rainbow Minerals is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,150 in African Rainbow Minerals on September 1, 2024 and sell it today you would earn a total of 70.00 from holding African Rainbow Minerals or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 3.97% |
| Values | Daily Returns |
Glencore PLC vs. African Rainbow Minerals
Performance |
| Timeline |
| Glencore PLC |
| African Rainbow Minerals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Glencore PLC and African Rainbow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and African Rainbow
The main advantage of trading using opposite Glencore PLC and African Rainbow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, African Rainbow 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 African Rainbow will offset losses from the drop in African Rainbow's long position.| Glencore PLC vs. Anglo American PLC | Glencore PLC vs. Teck Resources Ltd | Glencore PLC vs. BHP Group Limited | Glencore PLC vs. Vale SA ADR |
| African Rainbow vs. Ivanhoe Mines | African Rainbow vs. Glencore PLC | African Rainbow vs. Asia Broadband | African Rainbow vs. Rio Tinto Group |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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