Correlation Between Anglo American and Cobalt Blue
Can any of the company-specific risk be diversified away by investing in both Anglo American and Cobalt Blue 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 Anglo American and Cobalt Blue into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anglo American PLC and Cobalt Blue Holdings, you can compare the effects of market volatilities on Anglo American and Cobalt Blue 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 Anglo American with a short position of Cobalt Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Cobalt Blue.
Diversification Opportunities for Anglo American and Cobalt Blue
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Anglo and Cobalt is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American PLC and Cobalt Blue Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cobalt Blue Holdings and Anglo American 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 Anglo American PLC are associated (or correlated) with Cobalt Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cobalt Blue Holdings has no effect on the direction of Anglo American i.e., Anglo American and Cobalt Blue go up and down completely randomly.
Pair Corralation between Anglo American and Cobalt Blue
Assuming the 90 days horizon Anglo American PLC is expected to generate 0.31 times more return on investment than Cobalt Blue. However, Anglo American PLC is 3.21 times less risky than Cobalt Blue. It trades about -0.04 of its potential returns per unit of risk. Cobalt Blue Holdings is currently generating about -0.16 per unit of risk. If you would invest 1,561 in Anglo American PLC on August 31, 2024 and sell it today you would lose (44.00) from holding Anglo American PLC or give up 2.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anglo American PLC vs. Cobalt Blue Holdings
Performance |
| Timeline |
| Anglo American PLC |
| Cobalt Blue Holdings |
Anglo American and Cobalt Blue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Cobalt Blue
The main advantage of trading using opposite Anglo American and Cobalt Blue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Cobalt Blue 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 Cobalt Blue will offset losses from the drop in Cobalt Blue's long position.| Anglo American vs. BHP Group Limited | Anglo American vs. Avarone Metals | Anglo American vs. Huntsman Exploration | Anglo American vs. Aurelia Metals Limited |
| Cobalt Blue vs. Aurelia Metals Limited | Cobalt Blue vs. Centaurus Metals Limited | Cobalt Blue vs. Artemis Resources | Cobalt Blue vs. Ascendant Resources |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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