Correlation Between Apple and Southern Copper

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

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

Diversification Opportunities for Apple and Southern Copper

-0.4

Correlation Coefficient

Apple  Southern Copper

Very good diversification

The 3 months correlation between Apple and Southern is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and Southern Copper go up and down completely randomly.

Pair Corralation between Apple and Southern Copper

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.92 times more return on investment than Southern Copper. However, Apple Inc is 1.09 times less risky than Southern Copper. It trades about -0.05 of its potential returns per unit of risk. Southern Copper Corp is currently generating about -0.16 per unit of risk. If you would invest  23,360  in Apple Inc on October 26, 2024 and sell it today you would lose (1,110) from holding Apple Inc or give up 4.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.36%
Values	Daily Returns

Apple Inc  vs.  Southern Copper Corp

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Apple is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

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. Despite unsteady performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Apple and Southern Copper

The main advantage of trading using opposite Apple and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.