Correlation Between Life Healthcare and AngloGold Ashanti
Can any of the company-specific risk be diversified away by investing in both Life Healthcare and AngloGold Ashanti 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 Life Healthcare and AngloGold Ashanti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Healthcare and AngloGold Ashanti, you can compare the effects of market volatilities on Life Healthcare and AngloGold Ashanti 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 Life Healthcare with a short position of AngloGold Ashanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Healthcare and AngloGold Ashanti.
Diversification Opportunities for Life Healthcare and AngloGold Ashanti
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Life and AngloGold is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Life Healthcare and AngloGold Ashanti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AngloGold Ashanti and Life Healthcare 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 Life Healthcare are associated (or correlated) with AngloGold Ashanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AngloGold Ashanti has no effect on the direction of Life Healthcare i.e., Life Healthcare and AngloGold Ashanti go up and down completely randomly.
Pair Corralation between Life Healthcare and AngloGold Ashanti
Assuming the 90 days trading horizon Life Healthcare is expected to generate 0.81 times more return on investment than AngloGold Ashanti. However, Life Healthcare is 1.23 times less risky than AngloGold Ashanti. It trades about 0.16 of its potential returns per unit of risk. AngloGold Ashanti is currently generating about -0.02 per unit of risk. If you would invest 143,500 in Life Healthcare on September 12, 2024 and sell it today you would earn a total of 31,000 from holding Life Healthcare or generate 21.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Healthcare vs. AngloGold Ashanti
Performance |
| Timeline |
| Life Healthcare |
| AngloGold Ashanti |
Life Healthcare and AngloGold Ashanti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Healthcare and AngloGold Ashanti
The main advantage of trading using opposite Life Healthcare and AngloGold Ashanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Healthcare position performs unexpectedly, AngloGold Ashanti 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 AngloGold Ashanti will offset losses from the drop in AngloGold Ashanti's long position.| Life Healthcare vs. MC Mining | Life Healthcare vs. Deneb Investments | Life Healthcare vs. ABSA Bank Limited | Life Healthcare vs. Zeder Investments |
| AngloGold Ashanti vs. Zeder Investments | AngloGold Ashanti vs. Ascendis Health | AngloGold Ashanti vs. HomeChoice Investments | AngloGold Ashanti 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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