Correlation Between Apple and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Southern Copper, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Southern Copper.
Diversification Opportunities for Apple and Southern Copper
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Apple and Southern is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and Apple 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 Apple Inc 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 has no effect on the direction of Apple i.e., Apple and Southern Copper go up and down completely randomly.
Pair Corralation between Apple and Southern Copper
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.76 times more return on investment than Southern Copper. However, Apple Inc is 1.32 times less risky than Southern Copper. It trades about 0.3 of its potential returns per unit of risk. Southern Copper is currently generating about -0.2 per unit of risk. If you would invest 451,211 in Apple Inc on September 2, 2024 and sell it today you would earn a total of 33,789 from holding Apple Inc or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Apple Inc vs. Southern Copper
Performance |
| Timeline |
| Apple Inc |
| Southern Copper |
Apple and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Southern Copper
The main advantage of trading using opposite Apple and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.The idea behind Apple Inc and Southern Copper 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.| Southern Copper vs. Freeport McMoRan | Southern Copper vs. The Select Sector | Southern Copper vs. Promotora y Operadora | Southern Copper vs. iShares Global Timber |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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