Correlation Between Summit Materials and Antofagasta PLC

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

By analyzing existing cross correlation between Summit Materials Cl and Antofagasta PLC, you can compare the effects of market volatilities on Summit Materials and Antofagasta PLC 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 Summit Materials with a short position of Antofagasta PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Antofagasta PLC.

Diversification Opportunities for Summit Materials and Antofagasta PLC

-0.83

Correlation Coefficient

Summit Materials  Antofagasta PLC

Pay attention - limited upside

The 3 months correlation between Summit and Antofagasta is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Antofagasta PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antofagasta PLC and Summit Materials 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 Summit Materials Cl are associated (or correlated) with Antofagasta PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antofagasta PLC has no effect on the direction of Summit Materials i.e., Summit Materials and Antofagasta PLC go up and down completely randomly.

Pair Corralation between Summit Materials and Antofagasta PLC

Assuming the 90 days trading horizon Summit Materials Cl is expected to generate 0.98 times more return on investment than Antofagasta PLC. However, Summit Materials Cl is 1.02 times less risky than Antofagasta PLC. It trades about 0.18 of its potential returns per unit of risk. Antofagasta PLC is currently generating about -0.07 per unit of risk. If you would invest  3,967  in Summit Materials Cl on September 19, 2024 and sell it today you would earn a total of  1,113  from holding Summit Materials Cl or generate 28.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Summit Materials Cl  vs.  Antofagasta PLC

Summit Materials

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials Cl are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Summit Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Antofagasta PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Antofagasta PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Summit Materials and Antofagasta PLC

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

The idea behind Summit Materials Cl and Antofagasta PLC 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.