Correlation Between Southern Copper and INTERCONT HOTELS

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

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

Diversification Opportunities for Southern Copper and INTERCONT HOTELS

-0.67

Correlation Coefficient

Southern Copper  INTERCONT HOTELS

Excellent diversification

The 3 months correlation between Southern and INTERCONT is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS and Southern Copper 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 Southern Copper are associated (or correlated) with INTERCONT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERCONT HOTELS has no effect on the direction of Southern Copper i.e., Southern Copper and INTERCONT HOTELS go up and down completely randomly.

Pair Corralation between Southern Copper and INTERCONT HOTELS

Assuming the 90 days horizon Southern Copper is expected to under-perform the INTERCONT HOTELS. In addition to that, Southern Copper is 1.76 times more volatile than INTERCONT HOTELS. It trades about -0.17 of its total potential returns per unit of risk. INTERCONT HOTELS is currently generating about 0.16 per unit of volatility. If you would invest  11,500  in INTERCONT HOTELS on September 25, 2024 and sell it today you would earn a total of  500.00  from holding INTERCONT HOTELS or generate 4.35% return on investment over 90 days.

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

Southern Copper  vs.  INTERCONT HOTELS

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

INTERCONT HOTELS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTERCONT HOTELS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, INTERCONT HOTELS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southern Copper and INTERCONT HOTELS

The main advantage of trading using opposite Southern Copper and INTERCONT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, INTERCONT HOTELS 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 INTERCONT HOTELS will offset losses from the drop in INTERCONT HOTELS's long position.

The idea behind Southern Copper and INTERCONT HOTELS 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.