Correlation Between Made Tech and Southern Copper

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

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

Diversification Opportunities for Made Tech and Southern Copper

-0.82

Correlation Coefficient

Made Tech  Southern Copper

Pay attention - limited upside

The 3 months correlation between Made and Southern is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Made Tech Group and Southern Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper Corp and Made Tech 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 Made Tech Group 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 Corp has no effect on the direction of Made Tech i.e., Made Tech and Southern Copper go up and down completely randomly.

Pair Corralation between Made Tech and Southern Copper

Assuming the 90 days trading horizon Made Tech Group is expected to generate 1.64 times more return on investment than Southern Copper. However, Made Tech is 1.64 times more volatile than Southern Copper Corp. It trades about 0.13 of its potential returns per unit of risk. Southern Copper Corp is currently generating about -0.07 per unit of risk. If you would invest  1,700  in Made Tech Group on September 21, 2024 and sell it today you would earn a total of  550.00  from holding Made Tech Group or generate 32.35% return on investment over 90 days.

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

Made Tech Group  vs.  Southern Copper Corp

Made Tech Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Made Tech Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Made Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Made Tech and Southern Copper

The main advantage of trading using opposite Made Tech and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Made Tech 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 Made Tech Group and Southern Copper Corp 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.