Correlation Between Southern Copper and New Oriental
Can any of the company-specific risk be diversified away by investing in both Southern Copper and New Oriental 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 New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper and New Oriental Education, you can compare the effects of market volatilities on Southern Copper and New Oriental 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 New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and New Oriental.
Diversification Opportunities for Southern Copper and New Oriental
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Southern and New is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education 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 New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of Southern Copper i.e., Southern Copper and New Oriental go up and down completely randomly.
Pair Corralation between Southern Copper and New Oriental
Assuming the 90 days trading horizon Southern Copper is expected to generate 0.91 times more return on investment than New Oriental. However, Southern Copper is 1.1 times less risky than New Oriental. It trades about 0.1 of its potential returns per unit of risk. New Oriental Education is currently generating about 0.0 per unit of risk. If you would invest 134,418 in Southern Copper on November 3, 2024 and sell it today you would earn a total of 80,582 from holding Southern Copper or generate 59.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Copper vs. New Oriental Education
Performance |
| Timeline |
| Southern Copper |
| New Oriental Education |
Southern Copper and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and New Oriental
The main advantage of trading using opposite Southern Copper and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.| Southern Copper vs. Grupo Sports World | Southern Copper vs. Verizon Communications | Southern Copper vs. Cognizant Technology Solutions | Southern Copper vs. Samsung Electronics Co |
| New Oriental vs. Grupo Sports World | New Oriental vs. Micron Technology | New Oriental vs. Capital One Financial | New Oriental vs. Costco Wholesale |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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