Correlation Between Griffin Mining and Southern Copper

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

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

Diversification Opportunities for Griffin Mining and Southern Copper

0.08

Correlation Coefficient

Griffin Mining  Southern Copper

Significant diversification

The 3 months correlation between Griffin and Southern is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Griffin Mining 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 Griffin Mining 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 Griffin Mining 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 Griffin Mining i.e., Griffin Mining and Southern Copper go up and down completely randomly.

Pair Corralation between Griffin Mining and Southern Copper

Assuming the 90 days trading horizon Griffin Mining is expected to generate 1.38 times more return on investment than Southern Copper. However, Griffin Mining is 1.38 times more volatile than Southern Copper Corp. It trades about 0.09 of its potential returns per unit of risk. Southern Copper Corp is currently generating about 0.05 per unit of risk. If you would invest  14,550  in Griffin Mining on December 30, 2024 and sell it today you would earn a total of  2,050  from holding Griffin Mining or generate 14.09% return on investment over 90 days.

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

Griffin Mining  vs.  Southern Copper Corp

Griffin Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Griffin Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Griffin Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Southern Copper Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Copper Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Southern Copper may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Griffin Mining and Southern Copper

The main advantage of trading using opposite Griffin Mining and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffin Mining 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 Griffin Mining 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..