Correlation Between Southern Copper and SOGECLAIR

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

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

Diversification Opportunities for Southern Copper and SOGECLAIR

-0.16

Correlation Coefficient

Southern Copper  SOGECLAIR

Good diversification

The 3 months correlation between Southern and SOGECLAIR is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and SOGECLAIR SA INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGECLAIR SA INH 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 are associated (or correlated) with SOGECLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGECLAIR SA INH has no effect on the direction of Southern Copper i.e., Southern Copper and SOGECLAIR go up and down completely randomly.

Pair Corralation between Southern Copper and SOGECLAIR

Assuming the 90 days horizon Southern Copper is expected to generate 1.18 times more return on investment than SOGECLAIR. However, Southern Copper is 1.18 times more volatile than SOGECLAIR SA INH. It trades about 0.05 of its potential returns per unit of risk. SOGECLAIR SA INH is currently generating about 0.0 per unit of risk. If you would invest  5,739  in Southern Copper on September 28, 2024 and sell it today you would earn a total of  3,181  from holding Southern Copper or generate 55.43% return on investment over 90 days.

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

Southern Copper  vs.  SOGECLAIR SA INH

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SOGECLAIR SA INH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOGECLAIR SA INH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Southern Copper and SOGECLAIR

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

The idea behind Southern Copper and SOGECLAIR SA INH 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.