Correlation Between Air Products and Southern Copper

Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Products Chemicals and Southern Copper Corp, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Southern Copper.

Diversification Opportunities for Air Products and Southern Copper

-0.26

Correlation Coefficient

Air Products  Southern Copper

Very good diversification

The 3 months correlation between Air and Southern is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Southern Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper Corp and Air Products 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 Air Products Chemicals 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 Corp has no effect on the direction of Air Products i.e., Air Products and Southern Copper go up and down completely randomly.

Pair Corralation between Air Products and Southern Copper

Assuming the 90 days trading horizon Air Products is expected to generate 3.78 times less return on investment than Southern Copper. But when comparing it to its historical volatility, Air Products Chemicals is 1.32 times less risky than Southern Copper. It trades about 0.02 of its potential returns per unit of risk. Southern Copper Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,052  in Southern Copper Corp on December 30, 2024 and sell it today you would earn a total of  512.00  from holding Southern Copper Corp or generate 5.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Air Products Chemicals  vs.  Southern Copper Corp

Air Products Chemicals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products Chemicals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Air Products is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Southern Copper Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Copper Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Southern Copper may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Air Products and Southern Copper

The main advantage of trading using opposite Air Products and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.

The idea behind Air Products Chemicals and Southern Copper Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.