Correlation Between Copperbank Resources and Southern Copper

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

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

Diversification Opportunities for Copperbank Resources and Southern Copper

0.64

Correlation Coefficient

Copperbank Resources  Southern Copper

Poor diversification

The 3 months correlation between Copperbank and Southern is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Copperbank Resources Corp and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and Copperbank Resources 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 Copperbank Resources Corp 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 Copperbank Resources i.e., Copperbank Resources and Southern Copper go up and down completely randomly.

Pair Corralation between Copperbank Resources and Southern Copper

Assuming the 90 days horizon Copperbank Resources Corp is expected to generate 1.09 times more return on investment than Southern Copper. However, Copperbank Resources is 1.09 times more volatile than Southern Copper. It trades about 0.09 of its potential returns per unit of risk. Southern Copper is currently generating about 0.05 per unit of risk. If you would invest  54.00  in Copperbank Resources Corp on September 3, 2024 and sell it today you would earn a total of  7.00  from holding Copperbank Resources Corp or generate 12.96% return on investment over 90 days.

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

Copperbank Resources Corp  vs.  Southern Copper

Copperbank Resources Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Copperbank Resources Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Copperbank Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Southern Copper

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Copper are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Southern Copper may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Copperbank Resources and Southern Copper

The main advantage of trading using opposite Copperbank Resources and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copperbank Resources 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 Copperbank Resources Corp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.