Correlation Between Hawkins and Anglo American

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

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

Diversification Opportunities for Hawkins and Anglo American

-0.28

Correlation Coefficient

Hawkins  Anglo American

Very good diversification

The 3 months correlation between Hawkins and Anglo is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and Anglo American Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American Platinum and Hawkins 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 Hawkins are associated (or correlated) with Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American Platinum has no effect on the direction of Hawkins i.e., Hawkins and Anglo American go up and down completely randomly.

Pair Corralation between Hawkins and Anglo American

Given the investment horizon of 90 days Hawkins is expected to generate 0.56 times more return on investment than Anglo American. However, Hawkins is 1.78 times less risky than Anglo American. It trades about 0.08 of its potential returns per unit of risk. Anglo American Platinum is currently generating about -0.02 per unit of risk. If you would invest  12,231  in Hawkins on September 4, 2024 and sell it today you would earn a total of  1,434  from holding Hawkins or generate 11.72% return on investment over 90 days.

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

Hawkins  vs.  Anglo American Platinum

Hawkins

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward-looking signals, Hawkins displayed solid returns over the last few months and may actually be approaching a breakup point.

Anglo American Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anglo American Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Hawkins and Anglo American

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

The idea behind Hawkins and Anglo American Platinum 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.