Correlation Between Southern Copper and InRetail Peru

Can any of the company-specific risk be diversified away by investing in both Southern Copper and InRetail Peru 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 InRetail Peru 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 InRetail Peru Corp, you can compare the effects of market volatilities on Southern Copper and InRetail Peru 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 InRetail Peru. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and InRetail Peru.

Diversification Opportunities for Southern Copper and InRetail Peru

-0.47

Correlation Coefficient

Southern Copper  InRetail Peru

Very good diversification

The 3 months correlation between Southern and InRetail is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and InRetail Peru Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InRetail Peru Corp 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 InRetail Peru. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InRetail Peru Corp has no effect on the direction of Southern Copper i.e., Southern Copper and InRetail Peru go up and down completely randomly.

Pair Corralation between Southern Copper and InRetail Peru

Assuming the 90 days trading horizon Southern Copper Corp is expected to under-perform the InRetail Peru. In addition to that, Southern Copper is 2.19 times more volatile than InRetail Peru Corp. It trades about -0.21 of its total potential returns per unit of risk. InRetail Peru Corp is currently generating about 0.12 per unit of volatility. If you would invest  2,995  in InRetail Peru Corp on October 10, 2024 and sell it today you would earn a total of  175.00  from holding InRetail Peru Corp or generate 5.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Southern Copper Corp  vs.  InRetail Peru Corp

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. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

InRetail Peru Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InRetail Peru Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, InRetail Peru is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Southern Copper and InRetail Peru

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

The idea behind Southern Copper Corp and InRetail Peru 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.