Correlation Between InRetail Peru and Southern Copper

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

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

Diversification Opportunities for InRetail Peru and Southern Copper

0.03

Correlation Coefficient

InRetail Peru  Southern Copper

Significant diversification

The 3 months correlation between InRetail and Southern is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding InRetail Peru 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 InRetail Peru 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 InRetail Peru 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 InRetail Peru i.e., InRetail Peru and Southern Copper go up and down completely randomly.

Pair Corralation between InRetail Peru and Southern Copper

Assuming the 90 days trading horizon InRetail Peru Corp is expected to generate 0.35 times more return on investment than Southern Copper. However, InRetail Peru Corp is 2.87 times less risky than Southern Copper. It trades about 0.01 of its potential returns per unit of risk. Southern Copper Corp is currently generating about -0.18 per unit of risk. If you would invest  3,120  in InRetail Peru Corp on October 24, 2024 and sell it today you would earn a total of  10.00  from holding InRetail Peru Corp or generate 0.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

InRetail Peru Corp  vs.  Southern Copper Corp

InRetail Peru Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InRetail Peru Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, InRetail Peru is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 InRetail Peru and Southern Copper

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

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.