Correlation Between Southern Copper and KGHM Polska
Can any of the company-specific risk be diversified away by investing in both Southern Copper and KGHM Polska 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 KGHM Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper and KGHM Polska Miedz, you can compare the effects of market volatilities on Southern Copper and KGHM Polska 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 KGHM Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and KGHM Polska.
Diversification Opportunities for Southern Copper and KGHM Polska
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Southern and KGHM is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and KGHM Polska Miedz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGHM Polska Miedz 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 KGHM Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGHM Polska Miedz has no effect on the direction of Southern Copper i.e., Southern Copper and KGHM Polska go up and down completely randomly.
Pair Corralation between Southern Copper and KGHM Polska
Assuming the 90 days horizon Southern Copper is expected to generate 0.9 times more return on investment than KGHM Polska. However, Southern Copper is 1.11 times less risky than KGHM Polska. It trades about 0.02 of its potential returns per unit of risk. KGHM Polska Miedz is currently generating about 0.01 per unit of risk. If you would invest 8,595 in Southern Copper on November 2, 2024 and sell it today you would earn a total of 177.00 from holding Southern Copper or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Copper vs. KGHM Polska Miedz
Performance |
| Timeline |
| Southern Copper |
| KGHM Polska Miedz |
Southern Copper and KGHM Polska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and KGHM Polska
The main advantage of trading using opposite Southern Copper and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, KGHM Polska 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 KGHM Polska will offset losses from the drop in KGHM Polska'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 |
| KGHM Polska vs. Safety Insurance Group | KGHM Polska vs. Prosiebensat 1 Media | KGHM Polska vs. SQUIRREL MEDIA SA | KGHM Polska vs. HANOVER INSURANCE |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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