Correlation Between Anglo American and Raubex

Can any of the company-specific risk be diversified away by investing in both Anglo American and Raubex 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 Raubex 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 Raubex, you can compare the effects of market volatilities on Anglo American and Raubex 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 Raubex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Raubex.

Diversification Opportunities for Anglo American and Raubex

-0.53

Correlation Coefficient

Anglo American  Raubex

Excellent diversification

The 3 months correlation between Anglo and Raubex is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American Platinum and Raubex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raubex 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 Raubex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raubex has no effect on the direction of Anglo American i.e., Anglo American and Raubex go up and down completely randomly.

Pair Corralation between Anglo American and Raubex

Assuming the 90 days trading horizon Anglo American Platinum is expected to under-perform the Raubex. In addition to that, Anglo American is 1.22 times more volatile than Raubex. It trades about -0.03 of its total potential returns per unit of risk. Raubex is currently generating about 0.06 per unit of volatility. If you would invest  269,508  in Raubex on September 23, 2024 and sell it today you would earn a total of  256,092  from holding Raubex or generate 95.02% return on investment over 90 days.

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

Anglo American Platinum  vs.  Raubex

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. In spite of rather sound technical and fundamental indicators, Anglo American is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Raubex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raubex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Raubex is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Anglo American and Raubex

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

The idea behind Anglo American Platinum and Raubex 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.