Correlation Between Superior Plus and Southern Copper

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

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

Diversification Opportunities for Superior Plus and Southern Copper

0.16

Correlation Coefficient

Superior Plus  Southern Copper

Average diversification

The 3 months correlation between Superior and Southern is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and Superior Plus 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 Superior Plus Corp 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 has no effect on the direction of Superior Plus i.e., Superior Plus and Southern Copper go up and down completely randomly.

Pair Corralation between Superior Plus and Southern Copper

Assuming the 90 days horizon Superior Plus is expected to generate 1.51 times less return on investment than Southern Copper. In addition to that, Superior Plus is 1.02 times more volatile than Southern Copper. It trades about 0.01 of its total potential returns per unit of risk. Southern Copper is currently generating about 0.02 per unit of volatility. If you would invest  9,368  in Southern Copper on September 19, 2024 and sell it today you would earn a total of  32.00  from holding Southern Copper or generate 0.34% return on investment over 90 days.

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

Superior Plus Corp  vs.  Southern Copper

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Southern Copper

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Copper are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Southern Copper is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Superior Plus and Southern Copper

The main advantage of trading using opposite Superior Plus and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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 Superior Plus Corp and Southern Copper 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.