Correlation Between Southern Copper and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both Southern Copper and Baker Hughes 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 Southern Copper and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper Corp and Baker Hughes Co, you can compare the effects of market volatilities on Southern Copper and Baker Hughes 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 Southern Copper with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Baker Hughes.
Diversification Opportunities for Southern Copper and Baker Hughes
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Southern and Baker is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and Southern Copper 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 Southern Copper Corp are associated (or correlated) with Baker Hughes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Hughes has no effect on the direction of Southern Copper i.e., Southern Copper and Baker Hughes go up and down completely randomly.
Pair Corralation between Southern Copper and Baker Hughes
Assuming the 90 days trading horizon Southern Copper Corp is expected to generate 4.04 times more return on investment than Baker Hughes. However, Southern Copper is 4.04 times more volatile than Baker Hughes Co. It trades about 0.04 of its potential returns per unit of risk. Baker Hughes Co is currently generating about 0.05 per unit of risk. If you would invest 5,577 in Southern Copper Corp on September 23, 2024 and sell it today you would earn a total of 3,620 from holding Southern Copper Corp or generate 64.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Southern Copper Corp vs. Baker Hughes Co
Performance |
| Timeline |
| Southern Copper Corp |
| Baker Hughes |
Southern Copper and Baker Hughes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and Baker Hughes
The main advantage of trading using opposite Southern Copper and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, Baker Hughes 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 Baker Hughes will offset losses from the drop in Baker Hughes' long position.| Southern Copper vs. Celebrus Technologies plc | Southern Copper vs. Norwegian Air Shuttle | Southern Copper vs. PureTech Health plc | Southern Copper vs. Roadside Real Estate |
| Baker Hughes vs. Southern Copper Corp | Baker Hughes vs. Endeavour Mining Corp | Baker Hughes vs. Metals Exploration Plc | Baker Hughes vs. AMG Advanced Metallurgical |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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