Correlation Between Uniper SE and Southern Copper

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

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

Diversification Opportunities for Uniper SE and Southern Copper

0.86

Correlation Coefficient

Uniper SE  Southern Copper

Very poor diversification

The 3 months correlation between Uniper and Southern is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Uniper SE 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 Uniper SE 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 Uniper SE 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 Uniper SE i.e., Uniper SE and Southern Copper go up and down completely randomly.

Pair Corralation between Uniper SE and Southern Copper

Assuming the 90 days trading horizon Uniper SE is expected to generate 1.24 times more return on investment than Southern Copper. However, Uniper SE is 1.24 times more volatile than Southern Copper Corp. It trades about -0.1 of its potential returns per unit of risk. Southern Copper Corp is currently generating about -0.13 per unit of risk. If you would invest  4,727  in Uniper SE on September 24, 2024 and sell it today you would lose (840.00) from holding Uniper SE or give up 17.77% of portfolio value over 90 days.

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

Uniper SE  vs.  Southern Copper Corp

Uniper SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uniper SE 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Uniper SE and Southern Copper

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