Correlation Between Hannan Metals and Anglo American
Can any of the company-specific risk be diversified away by investing in both Hannan Metals and Anglo American 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 Hannan Metals and Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannan Metals and Anglo American plc, you can compare the effects of market volatilities on Hannan Metals and Anglo American 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 Hannan Metals with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannan Metals and Anglo American.
Diversification Opportunities for Hannan Metals and Anglo American
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hannan and Anglo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hannan Metals and Anglo American plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American plc and Hannan 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 Hannan Metals are associated (or correlated) with Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American plc has no effect on the direction of Hannan Metals i.e., Hannan Metals and Anglo American go up and down completely randomly.
Pair Corralation between Hannan Metals and Anglo American
Assuming the 90 days horizon Hannan Metals is expected to generate 2.75 times more return on investment than Anglo American. However, Hannan Metals is 2.75 times more volatile than Anglo American plc. It trades about 0.28 of its potential returns per unit of risk. Anglo American plc is currently generating about -0.11 per unit of risk. If you would invest 32.00 in Hannan Metals on September 1, 2024 and sell it today you would earn a total of 11.00 from holding Hannan Metals or generate 34.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannan Metals vs. Anglo American plc
Performance |
| Timeline |
| Hannan Metals |
| Anglo American plc |
Hannan Metals and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannan Metals and Anglo American
The main advantage of trading using opposite Hannan Metals and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannan Metals position performs unexpectedly, Anglo American 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 American will offset losses from the drop in Anglo American's long position.| Hannan Metals vs. Atco Mining | Hannan Metals vs. Leading Edge Materials | Hannan Metals vs. Arianne Phosphate | Hannan Metals vs. Global Battery Metals |
| Anglo American vs. Glencore PLC ADR | Anglo American vs. Fortescue Metals Group | Anglo American vs. South32 Limited | Anglo American vs. South32 ADR |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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