Correlation Between Allegheny Technologies and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and Southern Copper 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 Allegheny Technologies and Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegheny Technologies Incorporated and Southern Copper, you can compare the effects of market volatilities on Allegheny Technologies and Southern Copper 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 Allegheny Technologies with a short position of Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Southern Copper.
Diversification Opportunities for Allegheny Technologies and Southern Copper
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allegheny and Southern is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and Allegheny Technologies 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 Allegheny Technologies Incorporated are associated (or correlated) with Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Southern Copper go up and down completely randomly.
Pair Corralation between Allegheny Technologies and Southern Copper
Considering the 90-day investment horizon Allegheny Technologies is expected to generate 2.32 times less return on investment than Southern Copper. But when comparing it to its historical volatility, Allegheny Technologies Incorporated is 1.05 times less risky than Southern Copper. It trades about 0.13 of its potential returns per unit of risk. Southern Copper is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 10,324 in Southern Copper on January 20, 2024 and sell it today you would earn a total of 1,019 from holding Southern Copper or generate 9.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. Southern Copper
Performance |
| Timeline |
| Allegheny Technologies |
| Southern Copper |
Allegheny Technologies and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and Southern Copper
The main advantage of trading using opposite Allegheny Technologies and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| Allegheny Technologies vs. Northwest Pipe | Allegheny Technologies vs. Insteel Industries | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Gulf Island Fabrication |
| Southern Copper vs. Ero Copper Corp | Southern Copper vs. Hudbay Minerals | Southern Copper vs. Taseko Mines | Southern Copper vs. Amerigo Resources |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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