Correlation Between Anglo American and Uber Technologies

Can any of the company-specific risk be diversified away by investing in both Anglo American and Uber 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 Anglo American and Uber Technologies 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 Uber Technologies, you can compare the effects of market volatilities on Anglo American and Uber 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 Anglo American with a short position of Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Uber Technologies.

Diversification Opportunities for Anglo American and Uber Technologies

0.0

Correlation Coefficient

Anglo American  Uber Technologies

Pay attention - limited upside

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

Pair Corralation between Anglo American and Uber Technologies

Assuming the 90 days horizon Anglo American PLC is expected to under-perform the Uber Technologies. But the otc stock apears to be less risky and, when comparing its historical volatility, Anglo American PLC is 1.05 times less risky than Uber Technologies. The otc stock trades about -0.02 of its potential returns per unit of risk. The Uber Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,810  in Uber Technologies on January 24, 2024 and sell it today you would earn a total of  4,270  from holding Uber Technologies or generate 151.96% return on investment over 90 days.

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

Anglo American PLC  vs.  Uber Technologies

Anglo American PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anglo American PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Anglo American showed solid returns over the last few months and may actually be approaching a breakup point.

Uber Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Uber Technologies may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Anglo American and Uber Technologies

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

The idea behind Anglo American PLC and Uber 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.