Correlation Between Southern Copper and Dor Copper
Can any of the company-specific risk be diversified away by investing in both Southern Copper and Dor Copper 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 Dor Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper and Dor Copper Mining, you can compare the effects of market volatilities on Southern Copper and Dor Copper 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 Dor Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Dor Copper.
Diversification Opportunities for Southern Copper and Dor Copper
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Southern and Dor is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and Dor Copper Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dor Copper 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 Dor Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dor Copper Mining has no effect on the direction of Southern Copper i.e., Southern Copper and Dor Copper go up and down completely randomly.
Pair Corralation between Southern Copper and Dor Copper
Given the investment horizon of 90 days Southern Copper is expected to generate 1.03 times less return on investment than Dor Copper. But when comparing it to its historical volatility, Southern Copper is 3.02 times less risky than Dor Copper. It trades about 0.07 of its potential returns per unit of risk. Dor Copper Mining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Dor Copper Mining on August 25, 2024 and sell it today you would lose (2.20) from holding Dor Copper Mining or give up 18.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Southern Copper vs. Dor Copper Mining
Performance |
| Timeline |
| Southern Copper |
| Dor Copper Mining |
Southern Copper and Dor Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and Dor Copper
The main advantage of trading using opposite Southern Copper and Dor Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, Dor Copper 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 Dor Copper will offset losses from the drop in Dor Copper's long position.| Southern Copper vs. Ero Copper Corp | Southern Copper vs. Hudbay Minerals | Southern Copper vs. Taseko Mines | Southern Copper vs. Amerigo Resources |
| Dor Copper vs. Imperial Metals | Dor Copper vs. Bell Copper | Dor Copper vs. Copper Fox Metals | Dor Copper vs. Arizona Sonoran Copper |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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