Correlation Between Southern Copper and Grupo Herdez
Can any of the company-specific risk be diversified away by investing in both Southern Copper and Grupo Herdez 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 Grupo Herdez into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper and Grupo Herdez SAB, you can compare the effects of market volatilities on Southern Copper and Grupo Herdez 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 Grupo Herdez. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Grupo Herdez.
Diversification Opportunities for Southern Copper and Grupo Herdez
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Southern and Grupo is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and Grupo Herdez SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Herdez SAB 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 Grupo Herdez. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Herdez SAB has no effect on the direction of Southern Copper i.e., Southern Copper and Grupo Herdez go up and down completely randomly.
Pair Corralation between Southern Copper and Grupo Herdez
Assuming the 90 days trading horizon Southern Copper is expected to under-perform the Grupo Herdez. But the stock apears to be less risky and, when comparing its historical volatility, Southern Copper is 1.65 times less risky than Grupo Herdez. The stock trades about -0.2 of its potential returns per unit of risk. The Grupo Herdez SAB is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 5,203 in Grupo Herdez SAB on September 2, 2024 and sell it today you would lose (136.00) from holding Grupo Herdez SAB or give up 2.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Southern Copper vs. Grupo Herdez SAB
Performance |
| Timeline |
| Southern Copper |
| Grupo Herdez SAB |
Southern Copper and Grupo Herdez Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and Grupo Herdez
The main advantage of trading using opposite Southern Copper and Grupo Herdez positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, Grupo Herdez 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 Grupo Herdez will offset losses from the drop in Grupo Herdez's long position.| Southern Copper vs. Freeport McMoRan | Southern Copper vs. The Select Sector | Southern Copper vs. Promotora y Operadora | Southern Copper vs. iShares Global Timber |
| Grupo Herdez vs. Hoteles City Express | Grupo Herdez vs. UnitedHealth Group Incorporated | Grupo Herdez vs. Southern Copper | Grupo Herdez vs. McEwen Mining |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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