Correlation Between Banco De and Southern Copper

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

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

Diversification Opportunities for Banco De and Southern Copper

-0.56

Correlation Coefficient

Banco De  Southern Copper

Excellent diversification

The 3 months correlation between Banco and Southern is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Banco de Credito 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 Banco De 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 Banco de Credito 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 Banco De i.e., Banco De and Southern Copper go up and down completely randomly.

Pair Corralation between Banco De and Southern Copper

Assuming the 90 days trading horizon Banco de Credito is expected to under-perform the Southern Copper. But the stock apears to be less risky and, when comparing its historical volatility, Banco de Credito is 1.42 times less risky than Southern Copper. The stock trades about -0.18 of its potential returns per unit of risk. The Southern Copper Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  9,327  in Southern Copper Corp on October 24, 2024 and sell it today you would earn a total of  313.00  from holding Southern Copper Corp or generate 3.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	71.43%
Values	Daily Returns

Banco de Credito  vs.  Southern Copper Corp

Banco de Credito

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Banco de Credito are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Banco De may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 inconsistent 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 Banco De and Southern Copper

The main advantage of trading using opposite Banco De and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco De 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 Banco de Credito 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.