Correlation Between Southern Copper and Pfizer

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

Diversification Opportunities for Southern Copper and Pfizer

0.75

Correlation Coefficient

Southern Copper  Pfizer

Poor diversification

The 3 months correlation between Southern and Pfizer is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc 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 Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of Southern Copper i.e., Southern Copper and Pfizer go up and down completely randomly.

Pair Corralation between Southern Copper and Pfizer

Assuming the 90 days trading horizon Southern Copper Corp is expected to under-perform the Pfizer. In addition to that, Southern Copper is 1.18 times more volatile than Pfizer Inc. It trades about -0.15 of its total potential returns per unit of risk. Pfizer Inc is currently generating about 0.29 per unit of volatility. If you would invest  2,576  in Pfizer Inc on October 10, 2024 and sell it today you would earn a total of  167.00  from holding Pfizer Inc or generate 6.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	77.78%
Values	Daily Returns

Southern Copper Corp  vs.  Pfizer Inc

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.

Pfizer Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Pfizer is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Southern Copper and Pfizer

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

The idea behind Southern Copper Corp and Pfizer Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.