Correlation Between Southern Copper and Rimac Seguros

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

Diversification Opportunities for Southern Copper and Rimac Seguros

0.05

Correlation Coefficient

Southern Copper  Rimac Seguros

Significant diversification

The 3 months correlation between Southern and Rimac is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and Rimac Seguros y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rimac Seguros y 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 Rimac Seguros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rimac Seguros y has no effect on the direction of Southern Copper i.e., Southern Copper and Rimac Seguros go up and down completely randomly.

Pair Corralation between Southern Copper and Rimac Seguros

Assuming the 90 days trading horizon Southern Copper is expected to generate 3.16 times less return on investment than Rimac Seguros. But when comparing it to its historical volatility, Southern Copper Corp is 1.38 times less risky than Rimac Seguros. It trades about 0.04 of its potential returns per unit of risk. Rimac Seguros y is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  70.00  in Rimac Seguros y on October 11, 2024 and sell it today you would earn a total of  27.00  from holding Rimac Seguros y or generate 38.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	32.23%
Values	Daily Returns

Southern Copper Corp  vs.  Rimac Seguros y

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.

Rimac Seguros y

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Rimac Seguros y has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather inconsistent technical and fundamental indicators, Rimac Seguros exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southern Copper and Rimac Seguros

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

The idea behind Southern Copper Corp and Rimac Seguros y 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.