Correlation Between Grupo KUO and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Grupo KUO 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 Grupo KUO and Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo KUO SAB and Southern Copper, you can compare the effects of market volatilities on Grupo KUO 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 Grupo KUO with a short position of Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo KUO and Southern Copper.
Diversification Opportunities for Grupo KUO and Southern Copper
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Grupo and Southern is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Grupo KUO SAB and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and Grupo KUO 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 Grupo KUO SAB 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 Grupo KUO i.e., Grupo KUO and Southern Copper go up and down completely randomly.
Pair Corralation between Grupo KUO and Southern Copper
Assuming the 90 days trading horizon Grupo KUO is expected to generate 16.69 times less return on investment than Southern Copper. But when comparing it to its historical volatility, Grupo KUO SAB is 1.02 times less risky than Southern Copper. It trades about 0.01 of its potential returns per unit of risk. Southern Copper is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 115,622 in Southern Copper on September 12, 2024 and sell it today you would earn a total of 99,378 from holding Southern Copper or generate 85.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo KUO SAB vs. Southern Copper
Performance |
| Timeline |
| Grupo KUO SAB |
| Southern Copper |
Grupo KUO and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo KUO and Southern Copper
The main advantage of trading using opposite Grupo KUO and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo KUO 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.| Grupo KUO vs. Southern Copper | Grupo KUO vs. Micron Technology | Grupo KUO vs. United Airlines Holdings | Grupo KUO vs. New Oriental Education |
| Southern Copper vs. The Select Sector | Southern Copper vs. Promotora y Operadora | Southern Copper vs. iShares Global Timber | Southern Copper vs. SPDR Series Trust |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |