Correlation Between ANGLO AMERICAN and Orsted AS

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

By analyzing existing cross correlation between ANGLO AMERICAN SPADR and Orsted AS, you can compare the effects of market volatilities on ANGLO AMERICAN and Orsted AS 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 ANGLO AMERICAN with a short position of Orsted AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANGLO AMERICAN and Orsted AS.

Diversification Opportunities for ANGLO AMERICAN and Orsted AS

-0.37

Correlation Coefficient

ANGLO AMERICAN  Orsted AS

Very good diversification

The 3 months correlation between ANGLO and Orsted is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ANGLO AMERICAN SPADR and Orsted AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted AS and ANGLO AMERICAN 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 ANGLO AMERICAN SPADR are associated (or correlated) with Orsted AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted AS has no effect on the direction of ANGLO AMERICAN i.e., ANGLO AMERICAN and Orsted AS go up and down completely randomly.

Pair Corralation between ANGLO AMERICAN and Orsted AS

Assuming the 90 days trading horizon ANGLO AMERICAN SPADR is expected to generate 1.03 times more return on investment than Orsted AS. However, ANGLO AMERICAN is 1.03 times more volatile than Orsted AS. It trades about 0.01 of its potential returns per unit of risk. Orsted AS is currently generating about -0.34 per unit of risk. If you would invest  1,380  in ANGLO AMERICAN SPADR on September 22, 2024 and sell it today you would earn a total of  0.00  from holding ANGLO AMERICAN SPADR or generate 0.0% return on investment over 90 days.

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

ANGLO AMERICAN SPADR  vs.  Orsted AS

ANGLO AMERICAN SPADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ANGLO AMERICAN SPADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, ANGLO AMERICAN reported solid returns over the last few months and may actually be approaching a breakup point.

Orsted AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orsted AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ANGLO AMERICAN and Orsted AS

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

The idea behind ANGLO AMERICAN SPADR and Orsted AS 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.