Correlation Between Anfield Resources and Alligator Energy

Can any of the company-specific risk be diversified away by investing in both Anfield Resources and Alligator Energy 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 Anfield Resources and Alligator Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anfield Resources and Alligator Energy Limited, you can compare the effects of market volatilities on Anfield Resources and Alligator Energy 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 Anfield Resources with a short position of Alligator Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anfield Resources and Alligator Energy.

Diversification Opportunities for Anfield Resources and Alligator Energy

-0.43

Correlation Coefficient

Anfield Resources  Alligator Energy

Very good diversification

The 3 months correlation between Anfield and Alligator is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Anfield Resources and Alligator Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alligator Energy and Anfield Resources 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 Anfield Resources are associated (or correlated) with Alligator Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alligator Energy has no effect on the direction of Anfield Resources i.e., Anfield Resources and Alligator Energy go up and down completely randomly.

Pair Corralation between Anfield Resources and Alligator Energy

Assuming the 90 days horizon Anfield Resources is expected to under-perform the Alligator Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, Anfield Resources is 1.37 times less risky than Alligator Energy. The otc stock trades about -0.2 of its potential returns per unit of risk. The Alligator Energy Limited is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2.67  in Alligator Energy Limited on September 15, 2024 and sell it today you would lose (0.47) from holding Alligator Energy Limited or give up 17.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Anfield Resources  vs.  Alligator Energy Limited

Anfield Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anfield Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Anfield Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Alligator Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alligator Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Anfield Resources and Alligator Energy

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

The idea behind Anfield Resources and Alligator Energy Limited 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.