Correlation Between Southern Copper and Copper Mountain
Can any of the company-specific risk be diversified away by investing in both Southern Copper and Copper Mountain 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 Copper Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper and Copper Mountain Mining, you can compare the effects of market volatilities on Southern Copper and Copper Mountain 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 Copper Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Copper Mountain.
Diversification Opportunities for Southern Copper and Copper Mountain
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southern and Copper is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and Copper Mountain Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper Mountain Mining 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 Copper Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper Mountain Mining has no effect on the direction of Southern Copper i.e., Southern Copper and Copper Mountain go up and down completely randomly.
Pair Corralation between Southern Copper and Copper Mountain
Given the investment horizon of 90 days Southern Copper is expected to generate 0.38 times more return on investment than Copper Mountain. However, Southern Copper is 2.6 times less risky than Copper Mountain. It trades about -0.21 of its potential returns per unit of risk. Copper Mountain Mining is currently generating about -0.22 per unit of risk. If you would invest 11,340 in Southern Copper on August 27, 2024 and sell it today you would lose (1,139) from holding Southern Copper or give up 10.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Copper vs. Copper Mountain Mining
Performance |
| Timeline |
| Southern Copper |
| Copper Mountain Mining |
Southern Copper and Copper Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and Copper Mountain
The main advantage of trading using opposite Southern Copper and Copper Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, Copper Mountain 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 Copper Mountain will offset losses from the drop in Copper Mountain's long position.| Southern Copper vs. Ero Copper Corp | Southern Copper vs. Hudbay Minerals | Southern Copper vs. Taseko Mines | Southern Copper vs. Amerigo Resources |
| Copper Mountain vs. Ascendant Resources | Copper Mountain vs. Cantex Mine Development | Copper Mountain vs. Amarc Resources | Copper Mountain vs. Sterling Metals Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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