Correlation Between AngloGold Ashanti and Eguana Technologies
Can any of the company-specific risk be diversified away by investing in both AngloGold Ashanti and Eguana Technologies 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 AngloGold Ashanti and Eguana Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AngloGold Ashanti plc and Eguana Technologies, you can compare the effects of market volatilities on AngloGold Ashanti and Eguana Technologies 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 AngloGold Ashanti with a short position of Eguana Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and Eguana Technologies.
Diversification Opportunities for AngloGold Ashanti and Eguana Technologies
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AngloGold and Eguana is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc and Eguana Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eguana Technologies and AngloGold Ashanti 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 AngloGold Ashanti plc are associated (or correlated) with Eguana Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eguana Technologies has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and Eguana Technologies go up and down completely randomly.
Pair Corralation between AngloGold Ashanti and Eguana Technologies
Allowing for the 90-day total investment horizon AngloGold Ashanti is expected to generate 1.31 times less return on investment than Eguana Technologies. But when comparing it to its historical volatility, AngloGold Ashanti plc is 5.61 times less risky than Eguana Technologies. It trades about 0.05 of its potential returns per unit of risk. Eguana Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Eguana Technologies on January 25, 2024 and sell it today you would lose (4.00) from holding Eguana Technologies or give up 80.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
AngloGold Ashanti plc vs. Eguana Technologies
Performance |
| Timeline |
| AngloGold Ashanti plc |
| Eguana Technologies |
AngloGold Ashanti and Eguana Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AngloGold Ashanti and Eguana Technologies
The main advantage of trading using opposite AngloGold Ashanti and Eguana Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AngloGold Ashanti position performs unexpectedly, Eguana Technologies 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 Eguana Technologies will offset losses from the drop in Eguana Technologies' long position.The idea behind AngloGold Ashanti plc and Eguana Technologies 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.| Eguana Technologies vs. Aurora Solar Technologies | Eguana Technologies vs. PowerBand Solutions | Eguana Technologies vs. Thermal Energy International | Eguana Technologies vs. UGE International |
Check out your portfolio center.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.
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