Correlation Between Anfield Resources and Laramide Resources

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

By analyzing existing cross correlation between Anfield Resources and Laramide Resources, you can compare the effects of market volatilities on Anfield Resources and Laramide Resources 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 Anfield Resources with a short position of Laramide Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anfield Resources and Laramide Resources.

Diversification Opportunities for Anfield Resources and Laramide Resources

0.44

Correlation Coefficient

Anfield Resources  Laramide Resources

Very weak diversification

The 3 months correlation between Anfield and Laramide is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Anfield Resources and Laramide Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laramide Resources and Anfield Resources 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 Anfield Resources are associated (or correlated) with Laramide Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laramide Resources has no effect on the direction of Anfield Resources i.e., Anfield Resources and Laramide Resources go up and down completely randomly.

Pair Corralation between Anfield Resources and Laramide Resources

Assuming the 90 days horizon Anfield Resources is expected to under-perform the Laramide Resources. In addition to that, Anfield Resources is 2.58 times more volatile than Laramide Resources. It trades about -0.01 of its total potential returns per unit of risk. Laramide Resources is currently generating about 0.07 per unit of volatility. If you would invest  42.00  in Laramide Resources on December 30, 2024 and sell it today you would earn a total of  5.00  from holding Laramide Resources or generate 11.9% return on investment over 90 days.

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

Anfield Resources  vs.  Laramide Resources

Anfield Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anfield Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Laramide Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Laramide Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Laramide Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anfield Resources and Laramide Resources

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

The idea behind Anfield Resources and Laramide Resources 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.