Correlation Between HEMISPHERE EGY and Anglo American
Can any of the company-specific risk be diversified away by investing in both HEMISPHERE EGY 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 HEMISPHERE EGY and Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEMISPHERE EGY and Anglo American plc, you can compare the effects of market volatilities on HEMISPHERE EGY 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 HEMISPHERE EGY with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEMISPHERE EGY and Anglo American.
Diversification Opportunities for HEMISPHERE EGY and Anglo American
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HEMISPHERE and Anglo is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding HEMISPHERE EGY 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 HEMISPHERE EGY 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 HEMISPHERE EGY 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 HEMISPHERE EGY i.e., HEMISPHERE EGY and Anglo American go up and down completely randomly.
Pair Corralation between HEMISPHERE EGY and Anglo American
Assuming the 90 days trading horizon HEMISPHERE EGY is expected to generate 10.82 times less return on investment than Anglo American. In addition to that, HEMISPHERE EGY is 1.26 times more volatile than Anglo American plc. It trades about 0.03 of its total potential returns per unit of risk. Anglo American plc is currently generating about 0.37 per unit of volatility. If you would invest 2,700 in Anglo American plc on September 14, 2024 and sell it today you would earn a total of 383.00 from holding Anglo American plc or generate 14.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HEMISPHERE EGY vs. Anglo American plc
Performance |
| Timeline |
| HEMISPHERE EGY |
| Anglo American plc |
HEMISPHERE EGY and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEMISPHERE EGY and Anglo American
The main advantage of trading using opposite HEMISPHERE EGY and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEMISPHERE EGY 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.| HEMISPHERE EGY vs. Apple Inc | HEMISPHERE EGY vs. Apple Inc | HEMISPHERE EGY vs. Apple Inc | HEMISPHERE EGY vs. Apple Inc |
| Anglo American vs. HEMISPHERE EGY | Anglo American vs. Taiwan Semiconductor Manufacturing | Anglo American vs. Highlight Communications AG | Anglo American vs. Computershare Limited |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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