Correlation Between Southern Copper and Antofagasta Plc
Can any of the company-specific risk be diversified away by investing in both Southern Copper and Antofagasta Plc 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 Antofagasta Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper and Antofagasta plc, you can compare the effects of market volatilities on Southern Copper and Antofagasta Plc 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 Antofagasta Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Antofagasta Plc.
Diversification Opportunities for Southern Copper and Antofagasta Plc
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southern and Antofagasta is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and Antofagasta plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antofagasta plc 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 are associated (or correlated) with Antofagasta Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antofagasta plc has no effect on the direction of Southern Copper i.e., Southern Copper and Antofagasta Plc go up and down completely randomly.
Pair Corralation between Southern Copper and Antofagasta Plc
Assuming the 90 days horizon Southern Copper is expected to under-perform the Antofagasta Plc. But the stock apears to be less risky and, when comparing its historical volatility, Southern Copper is 1.34 times less risky than Antofagasta Plc. The stock trades about -0.07 of its potential returns per unit of risk. The Antofagasta plc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,938 in Antofagasta plc on November 2, 2024 and sell it today you would earn a total of 90.00 from holding Antofagasta plc or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Copper vs. Antofagasta plc
Performance |
| Timeline |
| Southern Copper |
| Antofagasta plc |
Southern Copper and Antofagasta Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and Antofagasta Plc
The main advantage of trading using opposite Southern Copper and Antofagasta Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, Antofagasta Plc 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 Antofagasta Plc will offset losses from the drop in Antofagasta Plc's long position.| Southern Copper vs. SEALED AIR | Southern Copper vs. SANOK RUBBER ZY | Southern Copper vs. THRACE PLASTICS | Southern Copper vs. LAir Liquide SA |
| Antofagasta Plc vs. CSSC Offshore Marine | Antofagasta Plc vs. WT OFFSHORE | Antofagasta Plc vs. Cars Inc | Antofagasta Plc vs. Cardinal Health |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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