Correlation Between Helios Fairfax and Anfield Resources

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

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

Diversification Opportunities for Helios Fairfax and Anfield Resources

0.01

Correlation Coefficient

Helios Fairfax  Anfield Resources

Significant diversification

The 3 months correlation between Helios and Anfield is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Helios Fairfax Partners and Anfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anfield Resources and Helios Fairfax 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 Helios Fairfax Partners 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 Helios Fairfax i.e., Helios Fairfax and Anfield Resources go up and down completely randomly.

Pair Corralation between Helios Fairfax and Anfield Resources

Assuming the 90 days trading horizon Helios Fairfax Partners is expected to under-perform the Anfield Resources. But the stock apears to be less risky and, when comparing its historical volatility, Helios Fairfax Partners is 1.75 times less risky than Anfield Resources. The stock trades about -0.02 of its potential returns per unit of risk. The Anfield Resources is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Anfield Resources on December 30, 2024 and sell it today you would lose (1.50) from holding Anfield Resources or give up 18.75% of portfolio value over 90 days.

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

Helios Fairfax Partners  vs.  Anfield Resources

Helios Fairfax Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Helios Fairfax Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Helios Fairfax is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Anfield Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anfield Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Anfield Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Helios Fairfax and Anfield Resources

The main advantage of trading using opposite Helios Fairfax and Anfield Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Helios Fairfax 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 Helios Fairfax Partners 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.