Correlation Between Southern Copper and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Southern Copper and Cognizant Technology 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 Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper and Cognizant Technology Solutions, you can compare the effects of market volatilities on Southern Copper and Cognizant Technology 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 Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Cognizant Technology.
Diversification Opportunities for Southern Copper and Cognizant Technology
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southern and Cognizant is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology 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 Cognizant Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognizant Technology has no effect on the direction of Southern Copper i.e., Southern Copper and Cognizant Technology go up and down completely randomly.
Pair Corralation between Southern Copper and Cognizant Technology
Assuming the 90 days trading horizon Southern Copper is expected to generate 1.82 times more return on investment than Cognizant Technology. However, Southern Copper is 1.82 times more volatile than Cognizant Technology Solutions. It trades about 0.11 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.07 per unit of risk. If you would invest 103,234 in Southern Copper on August 28, 2024 and sell it today you would earn a total of 106,956 from holding Southern Copper or generate 103.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Copper vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Southern Copper |
| Cognizant Technology |
Southern Copper and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and Cognizant Technology
The main advantage of trading using opposite Southern Copper and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, Cognizant Technology 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 Cognizant Technology will offset losses from the drop in Cognizant Technology's long position.| 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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