Correlation Between Fair Oaks and Anglesey Mining

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

By analyzing existing cross correlation between Fair Oaks Income and Anglesey Mining, you can compare the effects of market volatilities on Fair Oaks and Anglesey Mining 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 Fair Oaks with a short position of Anglesey Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and Anglesey Mining.

Diversification Opportunities for Fair Oaks and Anglesey Mining

-0.51

Correlation Coefficient

Fair Oaks  Anglesey Mining

Excellent diversification

The 3 months correlation between Fair and Anglesey is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and Anglesey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglesey Mining and Fair Oaks 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 Fair Oaks Income are associated (or correlated) with Anglesey Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglesey Mining has no effect on the direction of Fair Oaks i.e., Fair Oaks and Anglesey Mining go up and down completely randomly.

Pair Corralation between Fair Oaks and Anglesey Mining

Assuming the 90 days trading horizon Fair Oaks is expected to generate 1.66 times less return on investment than Anglesey Mining. But when comparing it to its historical volatility, Fair Oaks Income is 2.86 times less risky than Anglesey Mining. It trades about 0.21 of its potential returns per unit of risk. Anglesey Mining is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  88.00  in Anglesey Mining on September 19, 2024 and sell it today you would earn a total of  5.00  from holding Anglesey Mining or generate 5.68% return on investment over 90 days.

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

Fair Oaks Income  vs.  Anglesey Mining

Fair Oaks Income

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Oaks Income are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fair Oaks is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Anglesey Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anglesey Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Fair Oaks and Anglesey Mining

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

The idea behind Fair Oaks Income and Anglesey 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.