Correlation Between Southern Copper and Zegona Communications

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

Diversification Opportunities for Southern Copper and Zegona Communications

0.02

Correlation Coefficient

Southern Copper  Zegona Communications

Significant diversification

The 3 months correlation between Southern and Zegona is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and Zegona Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zegona Communications 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 Zegona Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zegona Communications Plc has no effect on the direction of Southern Copper i.e., Southern Copper and Zegona Communications go up and down completely randomly.

Pair Corralation between Southern Copper and Zegona Communications

Assuming the 90 days trading horizon Southern Copper Corp is expected to under-perform the Zegona Communications. But the stock apears to be less risky and, when comparing its historical volatility, Southern Copper Corp is 1.49 times less risky than Zegona Communications. The stock trades about -0.06 of its potential returns per unit of risk. The Zegona Communications Plc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  26,300  in Zegona Communications Plc on October 4, 2024 and sell it today you would earn a total of  15,500  from holding Zegona Communications Plc or generate 58.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.43%
Values	Daily Returns

Southern Copper Corp  vs.  Zegona Communications 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 uncertain 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.

Zegona Communications Plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zegona Communications Plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Zegona Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southern Copper and Zegona Communications

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

The idea behind Southern Copper Corp and Zegona Communications 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.