Correlation Between Anglo American and Clean Air

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

Diversification Opportunities for Anglo American and Clean Air

0.33

Correlation Coefficient

Anglo American  Clean Air

Weak diversification

The 3 months correlation between Anglo and Clean is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American PLC and Clean Air Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Air Metals 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 Clean Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Air Metals has no effect on the direction of Anglo American i.e., Anglo American and Clean Air go up and down completely randomly.

Pair Corralation between Anglo American and Clean Air

Assuming the 90 days horizon Anglo American is expected to generate 3.19 times less return on investment than Clean Air. But when comparing it to its historical volatility, Anglo American PLC is 3.73 times less risky than Clean Air. It trades about 0.08 of its potential returns per unit of risk. Clean Air Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2.80  in Clean Air Metals on May 16, 2025 and sell it today you would earn a total of  0.44  from holding Clean Air Metals or generate 15.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Anglo American PLC  vs.  Clean Air Metals

Anglo American PLC

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Anglo American PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Anglo American may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Clean Air Metals

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Air Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Clean Air reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anglo American and Clean Air

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

The idea behind Anglo American PLC and Clean Air Metals 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.