Correlation Between AngloGold Ashanti and Valhi

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

Diversification Opportunities for AngloGold Ashanti and Valhi

0.68

Correlation Coefficient

AngloGold Ashanti  Valhi

Poor diversification

The 3 months correlation between AngloGold and Valhi is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc and Valhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valhi Inc 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 Valhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valhi Inc has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and Valhi go up and down completely randomly.

Pair Corralation between AngloGold Ashanti and Valhi

Allowing for the 90-day total investment horizon AngloGold Ashanti plc is expected to generate 0.76 times more return on investment than Valhi. However, AngloGold Ashanti plc is 1.31 times less risky than Valhi. It trades about 0.03 of its potential returns per unit of risk. Valhi Inc is currently generating about 0.02 per unit of risk. If you would invest  1,891  in AngloGold Ashanti plc on September 20, 2024 and sell it today you would earn a total of  521.00  from holding AngloGold Ashanti plc or generate 27.55% return on investment over 90 days.

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

AngloGold Ashanti plc  vs.  Valhi Inc

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Valhi Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valhi Inc 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 technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with AngloGold Ashanti and Valhi

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

The idea behind AngloGold Ashanti plc and Valhi Inc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.