Correlation Between Anglo Asian and Sage Group

Can any of the company-specific risk be diversified away by investing in both Anglo Asian and Sage Group 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 Asian and Sage Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anglo Asian Mining and Sage Group PLC, you can compare the effects of market volatilities on Anglo Asian and Sage Group 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 Asian with a short position of Sage Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo Asian and Sage Group.

Diversification Opportunities for Anglo Asian and Sage Group

-0.23

Correlation Coefficient

Anglo Asian  Sage Group

Very good diversification

The 3 months correlation between Anglo and Sage is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Anglo Asian Mining and Sage Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Group PLC and Anglo Asian 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 Asian Mining are associated (or correlated) with Sage Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Group PLC has no effect on the direction of Anglo Asian i.e., Anglo Asian and Sage Group go up and down completely randomly.

Pair Corralation between Anglo Asian and Sage Group

Assuming the 90 days trading horizon Anglo Asian Mining is expected to generate 3.23 times more return on investment than Sage Group. However, Anglo Asian is 3.23 times more volatile than Sage Group PLC. It trades about 0.06 of its potential returns per unit of risk. Sage Group PLC is currently generating about -0.12 per unit of risk. If you would invest  10,800  in Anglo Asian Mining on December 23, 2024 and sell it today you would earn a total of  1,050  from holding Anglo Asian Mining or generate 9.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Anglo Asian Mining  vs.  Sage Group PLC

Anglo Asian Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anglo Asian Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Anglo Asian may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sage Group PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sage Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Anglo Asian and Sage Group

The main advantage of trading using opposite Anglo Asian and Sage Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo Asian position performs unexpectedly, Sage Group 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 Sage Group will offset losses from the drop in Sage Group's long position.

The idea behind Anglo Asian Mining and Sage Group PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.