Correlation Between Anglo American and Trio Tech

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

By analyzing existing cross correlation between Anglo American Platinum and Trio Tech International, you can compare the effects of market volatilities on Anglo American and Trio Tech 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 Trio Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Trio Tech.

Diversification Opportunities for Anglo American and Trio Tech

0.21

Correlation Coefficient

Anglo American  Trio Tech

Modest diversification

The 3 months correlation between Anglo and Trio is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American Platinum and Trio Tech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trio Tech International 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 Platinum are associated (or correlated) with Trio Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trio Tech International has no effect on the direction of Anglo American i.e., Anglo American and Trio Tech go up and down completely randomly.

Pair Corralation between Anglo American and Trio Tech

Assuming the 90 days horizon Anglo American Platinum is expected to generate 1.47 times more return on investment than Trio Tech. However, Anglo American is 1.47 times more volatile than Trio Tech International. It trades about 0.17 of its potential returns per unit of risk. Trio Tech International is currently generating about -0.15 per unit of risk. If you would invest  3,101  in Anglo American Platinum on October 25, 2024 and sell it today you would earn a total of  259.00  from holding Anglo American Platinum or generate 8.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Anglo American Platinum  vs.  Trio Tech International

Anglo American Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anglo American Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Trio Tech International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trio Tech International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Anglo American and Trio Tech

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

The idea behind Anglo American Platinum and Trio Tech International 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.