Correlation Between Ibstock PLC and Anglo Asian

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

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

Diversification Opportunities for Ibstock PLC and Anglo Asian

0.52

Correlation Coefficient

Ibstock PLC  Anglo Asian

Very weak diversification

The 3 months correlation between Ibstock and Anglo is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ibstock PLC 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 Ibstock PLC 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 Ibstock PLC 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 Ibstock PLC i.e., Ibstock PLC and Anglo Asian go up and down completely randomly.

Pair Corralation between Ibstock PLC and Anglo Asian

Assuming the 90 days trading horizon Ibstock PLC is expected to under-perform the Anglo Asian. But the stock apears to be less risky and, when comparing its historical volatility, Ibstock PLC is 1.7 times less risky than Anglo Asian. The stock trades about -0.03 of its potential returns per unit of risk. The Anglo Asian Mining is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  10,600  in Anglo Asian Mining on October 8, 2024 and sell it today you would lose (350.00) from holding Anglo Asian Mining or give up 3.3% of portfolio value over 90 days.

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

Ibstock PLC  vs.  Anglo Asian Mining

Ibstock PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ibstock PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ibstock PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 rather sound technical and fundamental indicators, Anglo Asian is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ibstock PLC and Anglo Asian

The main advantage of trading using opposite Ibstock PLC and Anglo Asian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ibstock PLC 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 Ibstock PLC 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.