Correlation Between Southern Copper and Halliburton

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

By analyzing existing cross correlation between Southern Copper and Halliburton, you can compare the effects of market volatilities on Southern Copper and Halliburton 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 Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Halliburton.

Diversification Opportunities for Southern Copper and Halliburton

-0.04

Correlation Coefficient

Southern Copper  Halliburton

Good diversification

The 3 months correlation between Southern and Halliburton is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton 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 are associated (or correlated) with Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Southern Copper i.e., Southern Copper and Halliburton go up and down completely randomly.

Pair Corralation between Southern Copper and Halliburton

Assuming the 90 days trading horizon Southern Copper is expected to generate 0.86 times more return on investment than Halliburton. However, Southern Copper is 1.16 times less risky than Halliburton. It trades about 0.07 of its potential returns per unit of risk. Halliburton is currently generating about -0.01 per unit of risk. If you would invest  109,708  in Southern Copper on September 24, 2024 and sell it today you would earn a total of  105,292  from holding Southern Copper or generate 95.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Southern Copper  vs.  Halliburton

Southern Copper

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Copper are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Southern Copper may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Halliburton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Halliburton has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Southern Copper and Halliburton

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

The idea behind Southern Copper and Halliburton 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.