Correlation Between Freeport McMoRan and Auction Technology

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

By analyzing existing cross correlation between Freeport McMoRan and Auction Technology Group, you can compare the effects of market volatilities on Freeport McMoRan and Auction Technology 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 Freeport McMoRan with a short position of Auction Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and Auction Technology.

Diversification Opportunities for Freeport McMoRan and Auction Technology

-0.79

Correlation Coefficient

Freeport McMoRan  Auction Technology

Pay attention - limited upside

The 3 months correlation between Freeport and Auction is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan and Auction Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auction Technology and Freeport McMoRan 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 Freeport McMoRan are associated (or correlated) with Auction Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auction Technology has no effect on the direction of Freeport McMoRan i.e., Freeport McMoRan and Auction Technology go up and down completely randomly.

Pair Corralation between Freeport McMoRan and Auction Technology

Assuming the 90 days trading horizon Freeport McMoRan is expected to generate 0.8 times more return on investment than Auction Technology. However, Freeport McMoRan is 1.25 times less risky than Auction Technology. It trades about 0.0 of its potential returns per unit of risk. Auction Technology Group is currently generating about -0.01 per unit of risk. If you would invest  4,452  in Freeport McMoRan on October 5, 2024 and sell it today you would lose (603.00) from holding Freeport McMoRan or give up 13.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Freeport McMoRan  vs.  Auction Technology Group

Freeport McMoRan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Auction Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Auction Technology Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Auction Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Freeport McMoRan and Auction Technology

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

The idea behind Freeport McMoRan and Auction Technology Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.