Correlation Between Southern Copper and Banco De

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

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

Diversification Opportunities for Southern Copper and Banco De

-0.13

Correlation Coefficient

Southern Copper  Banco De

Good diversification

The 3 months correlation between Southern and Banco is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and Banco de Credito in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco de Credito 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 Corp are associated (or correlated) with Banco De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco de Credito has no effect on the direction of Southern Copper i.e., Southern Copper and Banco De go up and down completely randomly.

Pair Corralation between Southern Copper and Banco De

Assuming the 90 days trading horizon Southern Copper Corp is expected to generate 1.91 times more return on investment than Banco De. However, Southern Copper is 1.91 times more volatile than Banco de Credito. It trades about 0.07 of its potential returns per unit of risk. Banco de Credito is currently generating about 0.02 per unit of risk. If you would invest  9,410  in Southern Copper Corp on December 25, 2024 and sell it today you would earn a total of  750.00  from holding Southern Copper Corp or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.55%
Values	Daily Returns

Southern Copper Corp  vs.  Banco de Credito

Southern Copper Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Copper Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Southern Copper may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Banco de Credito

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Banco de Credito are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Banco De is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Southern Copper and Banco De

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

The idea behind Southern Copper Corp and Banco de Credito 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.