Correlation Between Keweenaw Land and Anglo American

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

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

Diversification Opportunities for Keweenaw Land and Anglo American

0.13

Correlation Coefficient

Keweenaw Land  Anglo American

Average diversification

The 3 months correlation between Keweenaw and Anglo is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Keweenaw Land Association and Anglo American plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American plc and Keweenaw Land 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 Keweenaw Land Association 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 plc has no effect on the direction of Keweenaw Land i.e., Keweenaw Land and Anglo American go up and down completely randomly.

Pair Corralation between Keweenaw Land and Anglo American

Given the investment horizon of 90 days Keweenaw Land is expected to generate 5.22 times less return on investment than Anglo American. In addition to that, Keweenaw Land is 1.43 times more volatile than Anglo American plc. It trades about 0.01 of its total potential returns per unit of risk. Anglo American plc is currently generating about 0.09 per unit of volatility. If you would invest  2,745  in Anglo American plc on September 13, 2024 and sell it today you would earn a total of  370.00  from holding Anglo American plc or generate 13.48% return on investment over 90 days.

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

Keweenaw Land Association  vs.  Anglo American plc

Keweenaw Land Association

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Keweenaw Land Association has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Keweenaw Land is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Anglo American plc

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anglo American plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, Anglo American reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Keweenaw Land and Anglo American

The main advantage of trading using opposite Keweenaw Land and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keweenaw Land 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 Keweenaw Land Association and Anglo American plc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..