Correlation Between Copper 360 and Anglo American

Can any of the company-specific risk be diversified away by investing in both Copper 360 and Anglo American 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 Copper 360 and Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Copper 360 and Anglo American Platinum, you can compare the effects of market volatilities on Copper 360 and Anglo American 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 Copper 360 with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copper 360 and Anglo American.

Diversification Opportunities for Copper 360 and Anglo American

-0.52

Correlation Coefficient

Copper 360  Anglo American

Excellent diversification

The 3 months correlation between Copper and Anglo is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Copper 360 and Anglo American Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American Platinum and Copper 360 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 Copper 360 are associated (or correlated) with Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American Platinum has no effect on the direction of Copper 360 i.e., Copper 360 and Anglo American go up and down completely randomly.

Pair Corralation between Copper 360 and Anglo American

Assuming the 90 days trading horizon Copper 360 is expected to under-perform the Anglo American. In addition to that, Copper 360 is 1.14 times more volatile than Anglo American Platinum. It trades about -0.04 of its total potential returns per unit of risk. Anglo American Platinum is currently generating about 0.15 per unit of volatility. If you would invest  5,766,300  in Anglo American Platinum on December 23, 2024 and sell it today you would earn a total of  1,480,600  from holding Anglo American Platinum or generate 25.68% return on investment over 90 days.

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

Copper 360  vs.  Anglo American Platinum

Copper 360

Risk-Adjusted Performance

Very Weak

Over the last 90 days Copper 360 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Anglo American Platinum

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Anglo American Platinum are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Anglo American exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Copper 360 and Anglo American

The main advantage of trading using opposite Copper 360 and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copper 360 position performs unexpectedly, Anglo American 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 Anglo American will offset losses from the drop in Anglo American's long position.

The idea behind Copper 360 and Anglo American Platinum 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.