Correlation Between Southern Copper and Nexa Resources

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

Diversification Opportunities for Southern Copper and Nexa Resources

0.35

Correlation Coefficient

Southern Copper  Nexa Resources

Weak diversification

The 3 months correlation between Southern and Nexa is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and Nexa Resources Peru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexa Resources Peru 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 Nexa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexa Resources Peru has no effect on the direction of Southern Copper i.e., Southern Copper and Nexa Resources go up and down completely randomly.

Pair Corralation between Southern Copper and Nexa Resources

Assuming the 90 days trading horizon Southern Copper Corp is expected to generate 1.53 times more return on investment than Nexa Resources. However, Southern Copper is 1.53 times more volatile than Nexa Resources Peru. It trades about 0.06 of its potential returns per unit of risk. Nexa Resources Peru is currently generating about -0.36 per unit of risk. If you would invest  9,410  in Southern Copper Corp on October 26, 2024 and sell it today you would earn a total of  104.00  from holding Southern Copper Corp or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.33%
Values	Daily Returns

Southern Copper Corp  vs.  Nexa Resources Peru

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.

Nexa Resources Peru

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexa Resources Peru has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Southern Copper and Nexa Resources

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

The idea behind Southern Copper Corp and Nexa Resources Peru 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.