Correlation Between Tata Steel and Anglo Asian
Can any of the company-specific risk be diversified away by investing in both Tata Steel and Anglo Asian 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 Tata Steel and Anglo Asian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tata Steel Limited and Anglo Asian Mining, you can compare the effects of market volatilities on Tata Steel and Anglo Asian 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 Tata Steel with a short position of Anglo Asian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tata Steel and Anglo Asian.
Diversification Opportunities for Tata Steel and Anglo Asian
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tata and Anglo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Tata Steel Limited and Anglo Asian Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo Asian Mining and Tata Steel 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 Tata Steel Limited are associated (or correlated) with Anglo Asian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo Asian Mining has no effect on the direction of Tata Steel i.e., Tata Steel and Anglo Asian go up and down completely randomly.
Pair Corralation between Tata Steel and Anglo Asian
Assuming the 90 days trading horizon Tata Steel Limited is expected to under-perform the Anglo Asian. But the stock apears to be less risky and, when comparing its historical volatility, Tata Steel Limited is 1.57 times less risky than Anglo Asian. The stock trades about -0.04 of its potential returns per unit of risk. The Anglo Asian Mining is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 6,000 in Anglo Asian Mining on September 1, 2024 and sell it today you would earn a total of 4,150 from holding Anglo Asian Mining or generate 69.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tata Steel Limited vs. Anglo Asian Mining
Performance |
| Timeline |
| Tata Steel Limited |
| Anglo Asian Mining |
Tata Steel and Anglo Asian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tata Steel and Anglo Asian
The main advantage of trading using opposite Tata Steel and Anglo Asian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tata Steel position performs unexpectedly, Anglo Asian 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 Asian will offset losses from the drop in Anglo Asian's long position.| Tata Steel vs. Givaudan SA | Tata Steel vs. Antofagasta PLC | Tata Steel vs. Centamin PLC | Tata Steel vs. Atalaya Mining |
| Anglo Asian vs. Zanaga Iron Ore | Anglo Asian vs. Roadside Real Estate | Anglo Asian vs. Seche Environnement SA | Anglo Asian vs. EVS Broadcast Equipment |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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