Correlation Between Grupo Minsa and Southern Copper

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

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

Diversification Opportunities for Grupo Minsa and Southern Copper

-0.66

Correlation Coefficient

Grupo Minsa  Southern Copper

Excellent diversification

The 3 months correlation between Grupo and Southern is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Minsa SAB and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and Grupo Minsa 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 Grupo Minsa SAB 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 Grupo Minsa i.e., Grupo Minsa and Southern Copper go up and down completely randomly.

Pair Corralation between Grupo Minsa and Southern Copper

Assuming the 90 days trading horizon Grupo Minsa SAB is expected to generate 0.43 times more return on investment than Southern Copper. However, Grupo Minsa SAB is 2.34 times less risky than Southern Copper. It trades about 0.23 of its potential returns per unit of risk. Southern Copper is currently generating about -0.08 per unit of risk. If you would invest  880.00  in Grupo Minsa SAB on October 12, 2024 and sell it today you would earn a total of  50.00  from holding Grupo Minsa SAB or generate 5.68% return on investment over 90 days.

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

Grupo Minsa SAB  vs.  Southern Copper

Grupo Minsa SAB

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Minsa SAB are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Grupo Minsa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Southern Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Southern Copper is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Minsa and Southern Copper

The main advantage of trading using opposite Grupo Minsa and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Minsa 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 Grupo Minsa SAB 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.