Correlation Between Celanese and Southern Copper

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

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

Diversification Opportunities for Celanese and Southern Copper

0.81

Correlation Coefficient

Celanese  Southern Copper

Very poor diversification

The 3 months correlation between Celanese and Southern is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Celanese and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and Celanese 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 Celanese are associated (or correlated) with Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of Celanese i.e., Celanese and Southern Copper go up and down completely randomly.

Pair Corralation between Celanese and Southern Copper

Allowing for the 90-day total investment horizon Celanese is expected to under-perform the Southern Copper. But the stock apears to be less risky and, when comparing its historical volatility, Celanese is 1.06 times less risky than Southern Copper. The stock trades about -0.22 of its potential returns per unit of risk. The Southern Copper is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  10,068  in Southern Copper on September 22, 2024 and sell it today you would lose (870.00) from holding Southern Copper or give up 8.64% of portfolio value over 90 days.

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

Celanese  vs.  Southern Copper

Celanese

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celanese has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Southern Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Celanese and Southern Copper

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

The idea behind Celanese and Southern Copper 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.