Correlation Between Southern Copper and GoldMining
Can any of the company-specific risk be diversified away by investing in both Southern Copper and GoldMining 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 GoldMining 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 GoldMining, you can compare the effects of market volatilities on Southern Copper and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and GoldMining.
Diversification Opportunities for Southern Copper and GoldMining
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Southern and GoldMining is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Southern Copper i.e., Southern Copper and GoldMining go up and down completely randomly.
Pair Corralation between Southern Copper and GoldMining
Assuming the 90 days trading horizon Southern Copper Corp is expected to under-perform the GoldMining. But the stock apears to be less risky and, when comparing its historical volatility, Southern Copper Corp is 1.7 times less risky than GoldMining. The stock trades about -0.28 of its potential returns per unit of risk. The GoldMining is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 131.00 in GoldMining on August 30, 2024 and sell it today you would lose (10.00) from holding GoldMining or give up 7.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 63.64% |
| Values | Daily Returns |
Southern Copper Corp vs. GoldMining
Performance |
| Timeline |
| Southern Copper Corp |
| GoldMining |
Southern Copper and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and GoldMining
The main advantage of trading using opposite Southern Copper and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| Southern Copper vs. Tungsten West PLC | Southern Copper vs. Argo Group Limited | Southern Copper vs. Hardide PLC | Southern Copper vs. Versarien PLC |
| GoldMining vs. Ross Stores | GoldMining vs. Zoom Video Communications | GoldMining vs. Cairo Communication SpA | GoldMining vs. Dalata Hotel 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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