Correlation Between Centerra Gold and AngloGold Ashanti

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

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

Diversification Opportunities for Centerra Gold and AngloGold Ashanti

0.87

Correlation Coefficient

Centerra Gold  AngloGold Ashanti

Very poor diversification

The 3 months correlation between Centerra and AngloGold is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Centerra Gold and AngloGold Ashanti plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AngloGold Ashanti plc and Centerra Gold 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 Centerra Gold are associated (or correlated) with AngloGold Ashanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AngloGold Ashanti plc has no effect on the direction of Centerra Gold i.e., Centerra Gold and AngloGold Ashanti go up and down completely randomly.

Pair Corralation between Centerra Gold and AngloGold Ashanti

Given the investment horizon of 90 days Centerra Gold is expected to under-perform the AngloGold Ashanti. But the stock apears to be less risky and, when comparing its historical volatility, Centerra Gold is 1.14 times less risky than AngloGold Ashanti. The stock trades about -0.16 of its potential returns per unit of risk. The AngloGold Ashanti plc is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,875  in AngloGold Ashanti plc on September 24, 2024 and sell it today you would lose (485.00) from holding AngloGold Ashanti plc or give up 16.87% of portfolio value over 90 days.

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

Centerra Gold  vs.  AngloGold Ashanti plc

Centerra Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centerra Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent 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.

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 unfluctuating 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.

Pair Trading with Centerra Gold and AngloGold Ashanti

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

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