Correlation Between Automatic Data and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Automatic Data 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 Automatic Data and Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Data Processing and Southern Copper Corp, you can compare the effects of market volatilities on Automatic Data 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 Automatic Data with a short position of Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Southern Copper.
Diversification Opportunities for Automatic Data and Southern Copper
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Automatic and Southern is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing 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 Automatic Data 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 Automatic Data Processing 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 Automatic Data i.e., Automatic Data and Southern Copper go up and down completely randomly.
Pair Corralation between Automatic Data and Southern Copper
Assuming the 90 days trading horizon Automatic Data Processing is expected to under-perform the Southern Copper. But the stock apears to be less risky and, when comparing its historical volatility, Automatic Data Processing is 2.0 times less risky than Southern Copper. The stock trades about -0.06 of its potential returns per unit of risk. The Southern Copper Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10,232 in Southern Copper Corp on September 13, 2024 and sell it today you would earn a total of 194.00 from holding Southern Copper Corp or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. Southern Copper Corp
Performance |
| Timeline |
| Automatic Data Processing |
| Southern Copper Corp |
Automatic Data and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Southern Copper
The main advantage of trading using opposite Automatic Data and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data 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.| Automatic Data vs. Alfa Financial Software | Automatic Data vs. Sabien Technology Group | Automatic Data vs. Sunny Optical Technology | Automatic Data vs. Pfeiffer Vacuum Technology |
| Southern Copper vs. Electronic Arts | Southern Copper vs. Impax Asset Management | Southern Copper vs. Dentsply Sirona | Southern Copper vs. Southwest Airlines Co |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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