Correlation Between American CuMo and South32
Can any of the company-specific risk be diversified away by investing in both American CuMo and South32 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 American CuMo and South32 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American CuMo Mining and South32 Limited, you can compare the effects of market volatilities on American CuMo and South32 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 American CuMo with a short position of South32. Check out your portfolio center. Please also check ongoing floating volatility patterns of American CuMo and South32.
Diversification Opportunities for American CuMo and South32
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and South32 is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding American CuMo Mining and South32 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South32 Limited and American CuMo 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 American CuMo Mining are associated (or correlated) with South32. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South32 Limited has no effect on the direction of American CuMo i.e., American CuMo and South32 go up and down completely randomly.
Pair Corralation between American CuMo and South32
Assuming the 90 days horizon American CuMo Mining is expected to generate 5.92 times more return on investment than South32. However, American CuMo is 5.92 times more volatile than South32 Limited. It trades about 0.1 of its potential returns per unit of risk. South32 Limited is currently generating about 0.01 per unit of risk. If you would invest 1.00 in American CuMo Mining on September 3, 2024 and sell it today you would earn a total of 0.00 from holding American CuMo Mining or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 80.16% |
| Values | Daily Returns |
American CuMo Mining vs. South32 Limited
Performance |
| Timeline |
| American CuMo Mining |
| South32 Limited |
American CuMo and South32 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American CuMo and South32
The main advantage of trading using opposite American CuMo and South32 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American CuMo position performs unexpectedly, South32 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 South32 will offset losses from the drop in South32's long position.| American CuMo vs. Advantage Solutions | American CuMo vs. Atlas Corp | American CuMo vs. PureCycle Technologies | American CuMo vs. WM Technology |
| South32 vs. IGO Limited | South32 vs. Anglo American PLC | South32 vs. TNG Limited | South32 vs. Amarc 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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