Correlation Between Anglo American and Clifton Mining

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

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

Diversification Opportunities for Anglo American and Clifton Mining

0.75

Correlation Coefficient

Anglo American  Clifton Mining

Poor diversification

The 3 months correlation between Anglo and Clifton is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American Platinum and Clifton Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clifton 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 Platinum are associated (or correlated) with Clifton Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clifton Mining has no effect on the direction of Anglo American i.e., Anglo American and Clifton Mining go up and down completely randomly.

Pair Corralation between Anglo American and Clifton Mining

Assuming the 90 days horizon Anglo American is expected to generate 2.88 times less return on investment than Clifton Mining. But when comparing it to its historical volatility, Anglo American Platinum is 1.64 times less risky than Clifton Mining. It trades about 0.09 of its potential returns per unit of risk. Clifton Mining Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Clifton Mining Co on May 5, 2025 and sell it today you would earn a total of  5.00  from holding Clifton Mining Co or generate 100.0% return on investment over 90 days.

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

Anglo American Platinum  vs.  Clifton Mining Co

Anglo American Platinum

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anglo American Platinum are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Anglo American reported solid returns over the last few months and may actually be approaching a breakup point.

Clifton Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clifton Mining Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Clifton Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anglo American and Clifton Mining

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

The idea behind Anglo American Platinum and Clifton Mining Co 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.