Correlation Between Copper Mountain and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Copper Mountain 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 Copper Mountain and Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Copper Mountain Mining and Southern Copper, you can compare the effects of market volatilities on Copper Mountain 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 Copper Mountain with a short position of Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copper Mountain and Southern Copper.
Diversification Opportunities for Copper Mountain and Southern Copper
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Copper and Southern is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Copper Mountain Mining and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and Copper Mountain 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 Copper Mountain Mining 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 Copper Mountain i.e., Copper Mountain and Southern Copper go up and down completely randomly.
Pair Corralation between Copper Mountain and Southern Copper
Assuming the 90 days horizon Copper Mountain Mining is expected to under-perform the Southern Copper. In addition to that, Copper Mountain is 2.6 times more volatile than Southern Copper. It trades about -0.22 of its total potential returns per unit of risk. Southern Copper is currently generating about -0.21 per unit of volatility. If you would invest 11,340 in Southern Copper on August 27, 2024 and sell it today you would lose (1,139) from holding Southern Copper or give up 10.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copper Mountain Mining vs. Southern Copper
Performance |
| Timeline |
| Copper Mountain Mining |
| Southern Copper |
Copper Mountain and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copper Mountain and Southern Copper
The main advantage of trading using opposite Copper Mountain and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copper Mountain 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.| Copper Mountain vs. Ascendant Resources | Copper Mountain vs. Cantex Mine Development | Copper Mountain vs. Amarc Resources | Copper Mountain vs. Sterling Metals Corp |
| Southern Copper vs. Ero Copper Corp | Southern Copper vs. Hudbay Minerals | Southern Copper vs. Taseko Mines | Southern Copper vs. Amerigo Resources |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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