Correlation Between Optima Health and Southern Copper

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

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

Diversification Opportunities for Optima Health and Southern Copper

-0.12

Correlation Coefficient

Optima Health  Southern Copper

Good diversification

The 3 months correlation between Optima and Southern is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc 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 Optima Health 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 Optima Health plc 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 Optima Health i.e., Optima Health and Southern Copper go up and down completely randomly.

Pair Corralation between Optima Health and Southern Copper

Assuming the 90 days trading horizon Optima Health plc is expected to generate 0.53 times more return on investment than Southern Copper. However, Optima Health plc is 1.88 times less risky than Southern Copper. It trades about -0.03 of its potential returns per unit of risk. Southern Copper Corp is currently generating about -0.03 per unit of risk. If you would invest  15,100  in Optima Health plc on September 20, 2024 and sell it today you would lose (400.00) from holding Optima Health plc or give up 2.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Optima Health plc  vs.  Southern Copper Corp

Optima Health plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optima Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Optima Health is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 comparatively stable basic indicators, Southern Copper is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Optima Health and Southern Copper

The main advantage of trading using opposite Optima Health and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Health 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 Optima Health plc 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.