Correlation Between Anglo American and Taylor Maritime

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

Diversification Opportunities for Anglo American and Taylor Maritime

-0.4

Correlation Coefficient

Anglo American  Taylor Maritime

Very good diversification

The 3 months correlation between Anglo and Taylor is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American PLC and Taylor Maritime Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taylor Maritime Inve 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 Taylor Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taylor Maritime Inve has no effect on the direction of Anglo American i.e., Anglo American and Taylor Maritime go up and down completely randomly.

Pair Corralation between Anglo American and Taylor Maritime

Assuming the 90 days trading horizon Anglo American PLC is expected to generate 1.48 times more return on investment than Taylor Maritime. However, Anglo American is 1.48 times more volatile than Taylor Maritime Investments. It trades about 0.07 of its potential returns per unit of risk. Taylor Maritime Investments is currently generating about 0.02 per unit of risk. If you would invest  212,250  in Anglo American PLC on September 23, 2024 and sell it today you would earn a total of  21,100  from holding Anglo American PLC or generate 9.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Anglo American PLC  vs.  Taylor Maritime Investments

Anglo American PLC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anglo American PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Anglo American may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Taylor Maritime Inve

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Taylor Maritime Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Taylor Maritime is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Anglo American and Taylor Maritime

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

The idea behind Anglo American PLC and Taylor Maritime Investments 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.