Correlation Between Southern Copper and Tesla

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

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

Diversification Opportunities for Southern Copper and Tesla

0.9

Correlation Coefficient

Southern Copper  Tesla

Almost no diversification

The 3 months correlation between Southern and Tesla is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla 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 are associated (or correlated) with Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Southern Copper i.e., Southern Copper and Tesla go up and down completely randomly.

Pair Corralation between Southern Copper and Tesla

Assuming the 90 days trading horizon Southern Copper is expected to generate 0.23 times more return on investment than Tesla. However, Southern Copper is 4.27 times less risky than Tesla. It trades about -0.16 of its potential returns per unit of risk. Tesla Inc is currently generating about -0.14 per unit of risk. If you would invest  212,001  in Southern Copper on December 28, 2024 and sell it today you would lose (21,001) from holding Southern Copper or give up 9.91% of portfolio value over 90 days.

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

Southern Copper  vs.  Tesla Inc

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.

Tesla Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tesla Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Southern Copper and Tesla

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

The idea behind Southern Copper and Tesla 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.