Correlation Between National Atomic and Southern Copper

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

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

Diversification Opportunities for National Atomic and Southern Copper

0.05

Correlation Coefficient

National Atomic  Southern Copper

Significant diversification

The 3 months correlation between National and Southern is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding National Atomic Co 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 National Atomic 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 National Atomic Co 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 National Atomic i.e., National Atomic and Southern Copper go up and down completely randomly.

Pair Corralation between National Atomic and Southern Copper

Assuming the 90 days trading horizon National Atomic Co is expected to generate 0.82 times more return on investment than Southern Copper. However, National Atomic Co is 1.21 times less risky than Southern Copper. It trades about 0.05 of its potential returns per unit of risk. Southern Copper Corp is currently generating about -0.16 per unit of risk. If you would invest  3,650  in National Atomic Co on October 8, 2024 and sell it today you would earn a total of  145.00  from holding National Atomic Co or generate 3.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

National Atomic Co  vs.  Southern Copper Corp

National Atomic

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Atomic Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, National Atomic is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with National Atomic and Southern Copper

The main advantage of trading using opposite National Atomic and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Atomic 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 National Atomic Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.