Correlation Between Southern Copper and Aberdeen Diversified

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

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

Diversification Opportunities for Southern Copper and Aberdeen Diversified

0.15

Correlation Coefficient

Southern Copper  Aberdeen Diversified

Average diversification

The 3 months correlation between Southern and Aberdeen is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and Aberdeen Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Diversified 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 Corp are associated (or correlated) with Aberdeen Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Diversified has no effect on the direction of Southern Copper i.e., Southern Copper and Aberdeen Diversified go up and down completely randomly.

Pair Corralation between Southern Copper and Aberdeen Diversified

Assuming the 90 days trading horizon Southern Copper Corp is expected to under-perform the Aberdeen Diversified. In addition to that, Southern Copper is 1.08 times more volatile than Aberdeen Diversified Income. It trades about -0.13 of its total potential returns per unit of risk. Aberdeen Diversified Income is currently generating about 0.0 per unit of volatility. If you would invest  4,391  in Aberdeen Diversified Income on September 24, 2024 and sell it today you would lose (71.00) from holding Aberdeen Diversified Income or give up 1.62% of portfolio value over 90 days.

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

Southern Copper Corp  vs.  Aberdeen Diversified Income

Southern Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Copper Corp 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Aberdeen Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Diversified Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aberdeen Diversified 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 Southern Copper and Aberdeen Diversified

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

The idea behind Southern Copper Corp and Aberdeen Diversified Income 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.