Correlation Between Ternium SA and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Ternium SA and Southern 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 Ternium SA and Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ternium SA ADR and Southern Copper, you can compare the effects of market volatilities on Ternium SA and Southern 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 Ternium SA with a short position of Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and Southern Copper.
Diversification Opportunities for Ternium SA and Southern Copper
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ternium and Southern is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA ADR and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and Ternium SA 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 Ternium SA ADR are associated (or correlated) with Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of Ternium SA i.e., Ternium SA and Southern Copper go up and down completely randomly.
Pair Corralation between Ternium SA and Southern Copper
Allowing for the 90-day total investment horizon Ternium SA ADR is expected to generate 0.94 times more return on investment than Southern Copper. However, Ternium SA ADR is 1.06 times less risky than Southern Copper. It trades about -0.08 of its potential returns per unit of risk. Southern Copper is currently generating about -0.27 per unit of risk. If you would invest 3,470 in Ternium SA ADR on August 27, 2024 and sell it today you would lose (127.00) from holding Ternium SA ADR or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ternium SA ADR vs. Southern Copper
Performance |
| Timeline |
| Ternium SA ADR |
| Southern Copper |
Ternium SA and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ternium SA and Southern Copper
The main advantage of trading using opposite Ternium SA and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA position performs unexpectedly, Southern 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| Ternium SA vs. POSCO Holdings | Ternium SA vs. Steel Dynamics | Ternium SA vs. Gerdau SA ADR | Ternium SA vs. Nucor Corp |
| Southern Copper vs. Ero Copper Corp | Southern Copper vs. Hudbay Minerals | Southern Copper vs. Taseko Mines | Southern Copper vs. Amerigo Resources |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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