Correlation Between Eros Resources and Anfield Resources

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

By analyzing existing cross correlation between Eros Resources Corp and Anfield Resources, you can compare the effects of market volatilities on Eros Resources and Anfield Resources 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 Eros Resources with a short position of Anfield Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eros Resources and Anfield Resources.

Diversification Opportunities for Eros Resources and Anfield Resources

0.36

Correlation Coefficient

Eros Resources  Anfield Resources

Weak diversification

The 3 months correlation between Eros and Anfield is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eros Resources Corp and Anfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anfield Resources and Eros Resources 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 Eros Resources Corp are associated (or correlated) with Anfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anfield Resources has no effect on the direction of Eros Resources i.e., Eros Resources and Anfield Resources go up and down completely randomly.

Pair Corralation between Eros Resources and Anfield Resources

Assuming the 90 days horizon Eros Resources Corp is expected to under-perform the Anfield Resources. In addition to that, Eros Resources is 1.65 times more volatile than Anfield Resources. It trades about -0.12 of its total potential returns per unit of risk. Anfield Resources is currently generating about -0.14 per unit of volatility. If you would invest  11.00  in Anfield Resources on September 15, 2024 and sell it today you would lose (2.00) from holding Anfield Resources or give up 18.18% of portfolio value over 90 days.

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

Eros Resources Corp  vs.  Anfield Resources

Eros Resources Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eros Resources Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eros Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Anfield Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anfield Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Anfield Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eros Resources and Anfield Resources

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

The idea behind Eros Resources Corp and Anfield Resources 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 Transaction History module to view history of all your transactions and understand their impact on performance.