Correlation Between Southern Copper and Wise Plc

Can any of the company-specific risk be diversified away by investing in both Southern Copper and Wise Plc 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 Wise Plc 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 Wise plc, you can compare the effects of market volatilities on Southern Copper and Wise Plc 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 Wise Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Wise Plc.

Diversification Opportunities for Southern Copper and Wise Plc

-0.66

Correlation Coefficient

Southern Copper  Wise Plc

Excellent diversification

The 3 months correlation between Southern and Wise is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and Wise plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wise plc 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 Wise Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wise plc has no effect on the direction of Southern Copper i.e., Southern Copper and Wise Plc go up and down completely randomly.

Pair Corralation between Southern Copper and Wise Plc

Assuming the 90 days trading horizon Southern Copper Corp is expected to generate 3.14 times more return on investment than Wise Plc. However, Southern Copper is 3.14 times more volatile than Wise plc. It trades about 0.04 of its potential returns per unit of risk. Wise plc is currently generating about 0.05 per unit of risk. If you would invest  6,848  in Southern Copper Corp on October 4, 2024 and sell it today you would earn a total of  2,349  from holding Southern Copper Corp or generate 34.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.0%
Values	Daily Returns

Southern Copper Corp  vs.  Wise plc

Southern Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Wise plc

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Wise plc are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wise Plc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southern Copper and Wise Plc

The main advantage of trading using opposite Southern Copper and Wise Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, Wise Plc 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 Wise Plc will offset losses from the drop in Wise Plc's long position.

The idea behind Southern Copper Corp and Wise plc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.