Correlation Between DFS Furniture and Anglo Asian

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

By analyzing existing cross correlation between DFS Furniture PLC and Anglo Asian Mining, you can compare the effects of market volatilities on DFS Furniture and Anglo Asian 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 DFS Furniture with a short position of Anglo Asian. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Anglo Asian.

Diversification Opportunities for DFS Furniture and Anglo Asian

0.18

Correlation Coefficient

DFS Furniture  Anglo Asian

Average diversification

The 3 months correlation between DFS and Anglo is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Anglo Asian Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo Asian Mining and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with Anglo Asian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo Asian Mining has no effect on the direction of DFS Furniture i.e., DFS Furniture and Anglo Asian go up and down completely randomly.

Pair Corralation between DFS Furniture and Anglo Asian

Assuming the 90 days trading horizon DFS Furniture is expected to generate 36.58 times less return on investment than Anglo Asian. But when comparing it to its historical volatility, DFS Furniture PLC is 1.92 times less risky than Anglo Asian. It trades about 0.0 of its potential returns per unit of risk. Anglo Asian Mining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  10,403  in Anglo Asian Mining on October 5, 2024 and sell it today you would lose (3.00) from holding Anglo Asian Mining or give up 0.03% of portfolio value over 90 days.

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

DFS Furniture PLC  vs.  Anglo Asian Mining

DFS Furniture PLC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DFS Furniture PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, DFS Furniture may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Anglo Asian Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anglo Asian Mining 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.

Pair Trading with DFS Furniture and Anglo Asian

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

The idea behind DFS Furniture PLC and Anglo Asian Mining 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.