Correlation Between Compania and Sociedad Minera

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

By analyzing existing cross correlation between Compania de Minas and Sociedad Minera Corona, you can compare the effects of market volatilities on Compania and Sociedad Minera 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 Compania with a short position of Sociedad Minera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Sociedad Minera.

Diversification Opportunities for Compania and Sociedad Minera

0.75

Correlation Coefficient

Compania  Sociedad Minera

Poor diversification

The 3 months correlation between Compania and Sociedad is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Minas and Sociedad Minera Corona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad Minera Corona and Compania 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 Compania de Minas are associated (or correlated) with Sociedad Minera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad Minera Corona has no effect on the direction of Compania i.e., Compania and Sociedad Minera go up and down completely randomly.

Pair Corralation between Compania and Sociedad Minera

Assuming the 90 days trading horizon Compania de Minas is expected to under-perform the Sociedad Minera. In addition to that, Compania is 1.54 times more volatile than Sociedad Minera Corona. It trades about -0.05 of its total potential returns per unit of risk. Sociedad Minera Corona is currently generating about 0.21 per unit of volatility. If you would invest  1,250  in Sociedad Minera Corona on October 27, 2024 and sell it today you would earn a total of  50.00  from holding Sociedad Minera Corona or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	45.45%
Values	Daily Returns

Compania de Minas  vs.  Sociedad Minera Corona

Compania de Minas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compania de Minas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sociedad Minera Corona

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Compania and Sociedad Minera

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

The idea behind Compania de Minas and Sociedad Minera Corona 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.