Correlation Between Southern Copper and Metalurgica Peruana

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

Diversification Opportunities for Southern Copper and Metalurgica Peruana

0.0

Correlation Coefficient

Southern Copper  Metalurgica Peruana

Pay attention - limited upside

The 3 months correlation between Southern and Metalurgica is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and Metalurgica Peruana SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Peruana 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 Metalurgica Peruana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Peruana has no effect on the direction of Southern Copper i.e., Southern Copper and Metalurgica Peruana go up and down completely randomly.

Pair Corralation between Southern Copper and Metalurgica Peruana

If you would invest (100.00) in Metalurgica Peruana SA on October 26, 2024 and sell it today you would earn a total of  100.00  from holding Metalurgica Peruana SA or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Southern Copper Corp  vs.  Metalurgica Peruana SA

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 unsteady 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.

Metalurgica Peruana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalurgica Peruana SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Metalurgica Peruana is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Southern Copper and Metalurgica Peruana

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

The idea behind Southern Copper Corp and Metalurgica Peruana SA 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.