Correlation Between Anglo American and Adventus Mining

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

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

Diversification Opportunities for Anglo American and Adventus Mining

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Correlation Coefficient

Anglo American  Adventus Mining

Pay attention - limited upside

The 3 months correlation between Anglo and Adventus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American PLC and Adventus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adventus Mining 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 PLC are associated (or correlated) with Adventus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adventus Mining has no effect on the direction of Anglo American i.e., Anglo American and Adventus Mining go up and down completely randomly.

Pair Corralation between Anglo American and Adventus Mining

Assuming the 90 days horizon Anglo American PLC is expected to under-perform the Adventus Mining. But the otc stock apears to be less risky and, when comparing its historical volatility, Anglo American PLC is 1.8 times less risky than Adventus Mining. The otc stock trades about 0.0 of its potential returns per unit of risk. The Adventus Mining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Adventus Mining on October 25, 2024 and sell it today you would lose (3.00) from holding Adventus Mining or give up 8.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	76.88%
Values	Daily Returns

Anglo American PLC  vs.  Adventus Mining

Anglo American PLC

Risk-Adjusted Performance

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Weak

Over the last 90 days Anglo American PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Anglo American is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Adventus Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adventus Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adventus Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Anglo American and Adventus Mining

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

The idea behind Anglo American PLC and Adventus 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.