Correlation Between Antofagasta PLC and Roper Technologies

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

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

Diversification Opportunities for Antofagasta PLC and Roper Technologies

0.25

Correlation Coefficient

Antofagasta PLC  Roper Technologies

Modest diversification

The 3 months correlation between Antofagasta and Roper is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Antofagasta PLC and Roper Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roper Technologies and Antofagasta PLC 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 Antofagasta PLC are associated (or correlated) with Roper Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roper Technologies has no effect on the direction of Antofagasta PLC i.e., Antofagasta PLC and Roper Technologies go up and down completely randomly.

Pair Corralation between Antofagasta PLC and Roper Technologies

Assuming the 90 days trading horizon Antofagasta PLC is expected to under-perform the Roper Technologies. In addition to that, Antofagasta PLC is 1.71 times more volatile than Roper Technologies. It trades about -0.12 of its total potential returns per unit of risk. Roper Technologies is currently generating about -0.08 per unit of volatility. If you would invest  54,035  in Roper Technologies on October 10, 2024 and sell it today you would lose (3,283) from holding Roper Technologies or give up 6.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Antofagasta PLC  vs.  Roper Technologies

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 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.

Roper Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roper Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Roper Technologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Antofagasta PLC and Roper Technologies

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

The idea behind Antofagasta PLC and Roper Technologies 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.