Correlation Between Gelsenwasser and Anfield Resources

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

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

Diversification Opportunities for Gelsenwasser and Anfield Resources

-0.39

Correlation Coefficient

Gelsenwasser  Anfield Resources

Very good diversification

The 3 months correlation between Gelsenwasser and Anfield is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gelsenwasser AG and Anfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anfield Resources and Gelsenwasser 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 Gelsenwasser AG are associated (or correlated) with Anfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anfield Resources has no effect on the direction of Gelsenwasser i.e., Gelsenwasser and Anfield Resources go up and down completely randomly.

Pair Corralation between Gelsenwasser and Anfield Resources

Assuming the 90 days horizon Gelsenwasser AG is expected to under-perform the Anfield Resources. But the stock apears to be less risky and, when comparing its historical volatility, Gelsenwasser AG is 4.9 times less risky than Anfield Resources. The stock trades about -0.03 of its potential returns per unit of risk. The Anfield Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3.05  in Anfield Resources on September 19, 2024 and sell it today you would earn a total of  1.75  from holding Anfield Resources or generate 57.38% return on investment over 90 days.

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

Gelsenwasser AG  vs.  Anfield Resources

Gelsenwasser AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gelsenwasser AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Gelsenwasser is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Anfield Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anfield Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Anfield Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gelsenwasser and Anfield Resources

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

The idea behind Gelsenwasser AG and Anfield Resources 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.