Correlation Between Southern Copper and SPORTING

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

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

Diversification Opportunities for Southern Copper and SPORTING

0.44

Correlation Coefficient

Southern Copper  SPORTING

Very weak diversification

The 3 months correlation between Southern and SPORTING is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING 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 SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of Southern Copper i.e., Southern Copper and SPORTING go up and down completely randomly.

Pair Corralation between Southern Copper and SPORTING

Assuming the 90 days horizon Southern Copper is expected to generate 0.45 times more return on investment than SPORTING. However, Southern Copper is 2.22 times less risky than SPORTING. It trades about -0.19 of its potential returns per unit of risk. SPORTING is currently generating about -0.26 per unit of risk. If you would invest  9,672  in Southern Copper on October 4, 2024 and sell it today you would lose (780.00) from holding Southern Copper or give up 8.06% of portfolio value over 90 days.

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

Southern Copper  vs.  SPORTING

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SPORTING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPORTING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental 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 Southern Copper and SPORTING

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

The idea behind Southern Copper and SPORTING 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.