Correlation Between AngloGold Ashanti and Platinum Group

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

By analyzing existing cross correlation between AngloGold Ashanti plc and Platinum Group Metals, you can compare the effects of market volatilities on AngloGold Ashanti and Platinum 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 AngloGold Ashanti with a short position of Platinum Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and Platinum Group.

Diversification Opportunities for AngloGold Ashanti and Platinum Group

0.7

Correlation Coefficient

AngloGold Ashanti  Platinum Group

Poor diversification

The 3 months correlation between AngloGold and Platinum is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc and Platinum Group Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Group Metals and AngloGold Ashanti 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 AngloGold Ashanti plc are associated (or correlated) with Platinum Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Group Metals has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and Platinum Group go up and down completely randomly.

Pair Corralation between AngloGold Ashanti and Platinum Group

Allowing for the 90-day total investment horizon AngloGold Ashanti is expected to generate 2.1 times less return on investment than Platinum Group. But when comparing it to its historical volatility, AngloGold Ashanti plc is 1.53 times less risky than Platinum Group. It trades about 0.01 of its potential returns per unit of risk. Platinum Group Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  143.00  in Platinum Group Metals on October 3, 2024 and sell it today you would lose (15.00) from holding Platinum Group Metals or give up 10.49% of portfolio value over 90 days.

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

AngloGold Ashanti plc  vs.  Platinum Group Metals

AngloGold Ashanti plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AngloGold Ashanti plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Platinum Group Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AngloGold Ashanti and Platinum Group

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

The idea behind AngloGold Ashanti plc and Platinum Group Metals 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.