Correlation Between Intel and Southern Copper

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

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

Diversification Opportunities for Intel and Southern Copper

0.03

Correlation Coefficient

Intel  Southern Copper

Significant diversification

The 3 months correlation between Intel and Southern is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and Intel 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 Intel 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 has no effect on the direction of Intel i.e., Intel and Southern Copper go up and down completely randomly.

Pair Corralation between Intel and Southern Copper

Assuming the 90 days trading horizon Intel is expected to under-perform the Southern Copper. In addition to that, Intel is 1.31 times more volatile than Southern Copper. It trades about -0.08 of its total potential returns per unit of risk. Southern Copper is currently generating about 0.04 per unit of volatility. If you would invest  7,563  in Southern Copper on September 20, 2024 and sell it today you would earn a total of  1,661  from holding Southern Copper or generate 21.96% return on investment over 90 days.

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

Intel  vs.  Southern Copper

Intel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Intel is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Southern Copper

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Copper are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Southern Copper is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Intel and Southern Copper

The main advantage of trading using opposite Intel and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel and Southern Copper 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.