Correlation Between CHINA SOUTHN and Freeport McMoRan
Can any of the company-specific risk be diversified away by investing in both CHINA SOUTHN and Freeport McMoRan 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 CHINA SOUTHN and Freeport McMoRan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA SOUTHN AIR H and Freeport McMoRan, you can compare the effects of market volatilities on CHINA SOUTHN and Freeport McMoRan 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 CHINA SOUTHN with a short position of Freeport McMoRan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and Freeport McMoRan.
Diversification Opportunities for CHINA SOUTHN and Freeport McMoRan
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHINA and Freeport is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan and CHINA SOUTHN 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 CHINA SOUTHN AIR H are associated (or correlated) with Freeport McMoRan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of CHINA SOUTHN i.e., CHINA SOUTHN and Freeport McMoRan go up and down completely randomly.
Pair Corralation between CHINA SOUTHN and Freeport McMoRan
Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to under-perform the Freeport McMoRan. In addition to that, CHINA SOUTHN is 1.26 times more volatile than Freeport McMoRan. It trades about -0.17 of its total potential returns per unit of risk. Freeport McMoRan is currently generating about -0.21 per unit of volatility. If you would invest 4,069 in Freeport McMoRan on October 11, 2024 and sell it today you would lose (304.00) from holding Freeport McMoRan or give up 7.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA SOUTHN AIR H vs. Freeport McMoRan
Performance |
| Timeline |
| CHINA SOUTHN AIR |
| Freeport McMoRan |
CHINA SOUTHN and Freeport McMoRan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA SOUTHN and Freeport McMoRan
The main advantage of trading using opposite CHINA SOUTHN and Freeport McMoRan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA SOUTHN position performs unexpectedly, Freeport McMoRan 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 Freeport McMoRan will offset losses from the drop in Freeport McMoRan's long position.| CHINA SOUTHN vs. SCOTT TECHNOLOGY | CHINA SOUTHN vs. Firan Technology Group | CHINA SOUTHN vs. Micron Technology | CHINA SOUTHN vs. PACIFIC ONLINE |
| Freeport McMoRan vs. SAFEROADS HLDGS | Freeport McMoRan vs. TRAINLINE PLC LS | Freeport McMoRan vs. CHINA SOUTHN AIR H | Freeport McMoRan vs. ALTAIR RES INC |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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