Correlation Between Southern Copper and Deutsche Bank

Can any of the company-specific risk be diversified away by investing in both Southern Copper and Deutsche Bank 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 Deutsche Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Southern Copper and Deutsche Bank Aktiengesellschaft, you can compare the effects of market volatilities on Southern Copper and Deutsche Bank 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 Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Deutsche Bank.

Diversification Opportunities for Southern Copper and Deutsche Bank

-0.52

Correlation Coefficient

Southern Copper  Deutsche Bank

Excellent diversification

The 3 months correlation between Southern and Deutsche is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and Deutsche Bank Aktiengesellscha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank Aktien 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 are associated (or correlated) with Deutsche Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Bank Aktien has no effect on the direction of Southern Copper i.e., Southern Copper and Deutsche Bank go up and down completely randomly.

Pair Corralation between Southern Copper and Deutsche Bank

Assuming the 90 days trading horizon Southern Copper is expected to under-perform the Deutsche Bank. But the stock apears to be less risky and, when comparing its historical volatility, Southern Copper is 1.3 times less risky than Deutsche Bank. The stock trades about -0.28 of its potential returns per unit of risk. The Deutsche Bank Aktiengesellschaft is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  38,600  in Deutsche Bank Aktiengesellschaft on December 4, 2024 and sell it today you would earn a total of  5,202  from holding Deutsche Bank Aktiengesellschaft or generate 13.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Southern Copper  vs.  Deutsche Bank Aktiengesellscha

Southern Copper

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southern Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Deutsche Bank Aktien

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Deutsche Bank showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southern Copper and Deutsche Bank

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

The idea behind Southern Copper and Deutsche Bank Aktiengesellschaft 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.