Correlation Between Primary Health and Anglo Asian

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

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

Diversification Opportunities for Primary Health and Anglo Asian

0.49

Correlation Coefficient

Primary Health  Anglo Asian

Very weak diversification

The 3 months correlation between Primary and Anglo is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Primary Health Properties 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 Primary Health 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 Primary Health Properties 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 Primary Health i.e., Primary Health and Anglo Asian go up and down completely randomly.

Pair Corralation between Primary Health and Anglo Asian

Assuming the 90 days trading horizon Primary Health is expected to generate 2.0 times less return on investment than Anglo Asian. But when comparing it to its historical volatility, Primary Health Properties is 2.06 times less risky than Anglo Asian. It trades about 0.07 of its potential returns per unit of risk. Anglo Asian Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  10,800  in Anglo Asian Mining on December 22, 2024 and sell it today you would earn a total of  1,050  from holding Anglo Asian Mining or generate 9.72% return on investment over 90 days.

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

Primary Health Properties  vs.  Anglo Asian Mining

Primary Health Properties

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Primary Health Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Primary Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Anglo Asian Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anglo Asian Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Anglo Asian may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Primary Health and Anglo Asian

The main advantage of trading using opposite Primary Health and Anglo Asian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primary Health 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 Primary Health Properties 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.