Correlation Between Alta Copper and Southern Copper

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

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

Diversification Opportunities for Alta Copper and Southern Copper

0.35

Correlation Coefficient

Alta Copper  Southern Copper

Weak diversification

The 3 months correlation between Alta and Southern is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Alta Copper Corp 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 Alta 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 Alta Copper 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 Corp has no effect on the direction of Alta Copper i.e., Alta Copper and Southern Copper go up and down completely randomly.

Pair Corralation between Alta Copper and Southern Copper

Assuming the 90 days trading horizon Alta Copper is expected to generate 2.14 times less return on investment than Southern Copper. In addition to that, Alta Copper is 2.61 times more volatile than Southern Copper Corp. It trades about 0.01 of its total potential returns per unit of risk. Southern Copper Corp is currently generating about 0.04 per unit of volatility. If you would invest  7,527  in Southern Copper Corp on October 11, 2024 and sell it today you would earn a total of  2,308  from holding Southern Copper Corp or generate 30.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	46.21%
Values	Daily Returns

Alta Copper Corp  vs.  Southern Copper Corp

Alta Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alta Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Alta Copper is not utilizing all of its potentials. The latest 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 weak 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 Alta Copper and Southern Copper

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

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.