Correlation Between Southern Copper and RTL Group
Can any of the company-specific risk be diversified away by investing in both Southern Copper and RTL Group 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 RTL Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper Corp and RTL Group SA, you can compare the effects of market volatilities on Southern Copper and RTL Group 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 RTL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and RTL Group.
Diversification Opportunities for Southern Copper and RTL Group
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southern and RTL is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and RTL Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL Group SA 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 Corp are associated (or correlated) with RTL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL Group SA has no effect on the direction of Southern Copper i.e., Southern Copper and RTL Group go up and down completely randomly.
Pair Corralation between Southern Copper and RTL Group
Assuming the 90 days trading horizon Southern Copper Corp is expected to generate 6.28 times more return on investment than RTL Group. However, Southern Copper is 6.28 times more volatile than RTL Group SA. It trades about 0.05 of its potential returns per unit of risk. RTL Group SA is currently generating about -0.05 per unit of risk. If you would invest 6,864 in Southern Copper Corp on September 2, 2024 and sell it today you would earn a total of 3,094 from holding Southern Copper Corp or generate 45.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Southern Copper Corp vs. RTL Group SA
Performance |
| Timeline |
| Southern Copper Corp |
| RTL Group SA |
Southern Copper and RTL Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and RTL Group
The main advantage of trading using opposite Southern Copper and RTL Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, RTL Group 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 RTL Group will offset losses from the drop in RTL Group's long position.| Southern Copper vs. New Residential Investment | Southern Copper vs. Future Metals NL | Southern Copper vs. Europa Metals | Southern Copper vs. Fulcrum Metals PLC |
| RTL Group vs. GreenX Metals | RTL Group vs. Panther Metals PLC | RTL Group vs. Trainline Plc | RTL Group vs. Southern Copper Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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