Correlation Between FC Investment and Anglo Asian

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

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

Diversification Opportunities for FC Investment and Anglo Asian

-0.53

Correlation Coefficient

FC Investment  Anglo Asian

Excellent diversification

The 3 months correlation between FCIT and Anglo is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust 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 FC Investment 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 FC Investment Trust 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 FC Investment i.e., FC Investment and Anglo Asian go up and down completely randomly.

Pair Corralation between FC Investment and Anglo Asian

Assuming the 90 days trading horizon FC Investment Trust is expected to under-perform the Anglo Asian. But the stock apears to be less risky and, when comparing its historical volatility, FC Investment Trust is 2.56 times less risky than Anglo Asian. The stock trades about -0.06 of its potential returns per unit of risk. The Anglo Asian Mining is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10,300  in Anglo Asian Mining on October 7, 2024 and sell it today you would lose (50.00) from holding Anglo Asian Mining or give up 0.49% of portfolio value over 90 days.

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

FC Investment Trust  vs.  Anglo Asian Mining

FC Investment Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FC Investment Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, FC Investment 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 uncertain 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 FC Investment and Anglo Asian

The main advantage of trading using opposite FC Investment and Anglo Asian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment 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 FC Investment Trust 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.