Correlation Between Anglo American and Silver Viper

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

Diversification Opportunities for Anglo American and Silver Viper

0.62

Correlation Coefficient

Anglo American  Silver Viper

Poor diversification

The 3 months correlation between Anglo and Silver is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American Platinum and Silver Viper Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Viper Minerals 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 Silver Viper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Viper Minerals has no effect on the direction of Anglo American i.e., Anglo American and Silver Viper go up and down completely randomly.

Pair Corralation between Anglo American and Silver Viper

Assuming the 90 days horizon Anglo American Platinum is expected to under-perform the Silver Viper. But the pink sheet apears to be less risky and, when comparing its historical volatility, Anglo American Platinum is 1.42 times less risky than Silver Viper. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Silver Viper Minerals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3.73  in Silver Viper Minerals on September 4, 2024 and sell it today you would lose (0.18) from holding Silver Viper Minerals or give up 4.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Anglo American Platinum  vs.  Silver Viper Minerals

Anglo American Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anglo American Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Silver Viper Minerals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Viper Minerals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Silver Viper may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Anglo American and Silver Viper

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

The idea behind Anglo American Platinum and Silver Viper Minerals 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.