Correlation Between Southern Copper and URU Metals
Can any of the company-specific risk be diversified away by investing in both Southern Copper and URU Metals 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 URU Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper Corp and URU Metals, you can compare the effects of market volatilities on Southern Copper and URU Metals 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 URU Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and URU Metals.
Diversification Opportunities for Southern Copper and URU Metals
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Southern and URU is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and URU Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URU Metals 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 Corp are associated (or correlated) with URU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URU Metals has no effect on the direction of Southern Copper i.e., Southern Copper and URU Metals go up and down completely randomly.
Pair Corralation between Southern Copper and URU Metals
Assuming the 90 days trading horizon Southern Copper Corp is expected to under-perform the URU Metals. But the stock apears to be less risky and, when comparing its historical volatility, Southern Copper Corp is 2.38 times less risky than URU Metals. The stock trades about -0.16 of its potential returns per unit of risk. The URU Metals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 13,500 in URU Metals on September 25, 2024 and sell it today you would earn a total of 1,500 from holding URU Metals or generate 11.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Southern Copper Corp vs. URU Metals
Performance |
Timeline |
Southern Copper Corp |
URU Metals |
Southern Copper and URU Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Southern Copper and URU Metals
The main advantage of trading using opposite Southern Copper and URU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, URU Metals 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 URU Metals will offset losses from the drop in URU Metals' long position.Southern Copper vs. Uniper SE | Southern Copper vs. Mulberry Group PLC | Southern Copper vs. London Security Plc | Southern Copper vs. Triad Group PLC |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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