Correlation Between Southern Copper and Axfood AB
Can any of the company-specific risk be diversified away by investing in both Southern Copper and Axfood AB 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 Axfood AB 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 Axfood AB, you can compare the effects of market volatilities on Southern Copper and Axfood AB 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 Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Axfood AB.
Diversification Opportunities for Southern Copper and Axfood AB
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southern and Axfood is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Southern Copper i.e., Southern Copper and Axfood AB go up and down completely randomly.
Pair Corralation between Southern Copper and Axfood AB
Assuming the 90 days trading horizon Southern Copper Corp is expected to generate 7.09 times more return on investment than Axfood AB. However, Southern Copper is 7.09 times more volatile than Axfood AB. It trades about 0.05 of its potential returns per unit of risk. Axfood AB is currently generating about -0.01 per unit of risk. If you would invest 7,198 in Southern Copper Corp on September 14, 2024 and sell it today you would earn a total of 2,972 from holding Southern Copper Corp or generate 41.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.26% |
| Values | Daily Returns |
Southern Copper Corp vs. Axfood AB
Performance |
| Timeline |
| Southern Copper Corp |
| Axfood AB |
Southern Copper and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and Axfood AB
The main advantage of trading using opposite Southern Copper and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| Southern Copper vs. Aeorema Communications Plc | Southern Copper vs. Cellnex Telecom SA | Southern Copper vs. Silvercorp Metals | Southern Copper vs. Europa Metals |
| Axfood AB vs. UNIQA Insurance Group | Axfood AB vs. Southern Copper Corp | Axfood AB vs. European Metals Holdings | Axfood AB vs. Sabre Insurance Group |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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