Correlation Between AngloGold Ashanti and Alpha Metallurgical

Can any of the company-specific risk be diversified away by investing in both AngloGold Ashanti and Alpha Metallurgical 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 Alpha Metallurgical 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 Alpha Metallurgical Resources, you can compare the effects of market volatilities on AngloGold Ashanti and Alpha Metallurgical 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 Alpha Metallurgical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and Alpha Metallurgical.

Diversification Opportunities for AngloGold Ashanti and Alpha Metallurgical

-0.74

Correlation Coefficient

AngloGold Ashanti  Alpha Metallurgical

Pay attention - limited upside

The 3 months correlation between AngloGold and Alpha is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc and Alpha Metallurgical Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Metallurgical 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 Alpha Metallurgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Metallurgical has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and Alpha Metallurgical go up and down completely randomly.

Pair Corralation between AngloGold Ashanti and Alpha Metallurgical

Allowing for the 90-day total investment horizon AngloGold Ashanti is expected to generate 1.34 times less return on investment than Alpha Metallurgical. But when comparing it to its historical volatility, AngloGold Ashanti plc is 1.14 times less risky than Alpha Metallurgical. It trades about 0.1 of its potential returns per unit of risk. Alpha Metallurgical Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  22,299  in Alpha Metallurgical Resources on January 30, 2024 and sell it today you would earn a total of  12,091  from holding Alpha Metallurgical Resources or generate 54.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

AngloGold Ashanti plc  vs.  Alpha Metallurgical Resources

AngloGold Ashanti plc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AngloGold Ashanti plc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, AngloGold Ashanti unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alpha Metallurgical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Metallurgical Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with AngloGold Ashanti and Alpha Metallurgical

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

The idea behind AngloGold Ashanti plc and Alpha Metallurgical Resources 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.