Correlation Between Southern Copper and Amerigo Resources

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

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

Diversification Opportunities for Southern Copper and Amerigo Resources

0.48

Correlation Coefficient

Southern Copper  Amerigo Resources

Very weak diversification

The 3 months correlation between Southern and Amerigo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and Amerigo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amerigo Resources 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 Amerigo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amerigo Resources has no effect on the direction of Southern Copper i.e., Southern Copper and Amerigo Resources go up and down completely randomly.

Pair Corralation between Southern Copper and Amerigo Resources

Given the investment horizon of 90 days Southern Copper is expected to generate 3.79 times less return on investment than Amerigo Resources. But when comparing it to its historical volatility, Southern Copper is 1.06 times less risky than Amerigo Resources. It trades about 0.05 of its potential returns per unit of risk. Amerigo Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Amerigo Resources on December 30, 2024 and sell it today you would earn a total of  24.00  from holding Amerigo Resources or generate 21.82% return on investment over 90 days.

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

Southern Copper  vs.  Amerigo Resources

Southern Copper

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Copper are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Southern Copper is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Amerigo Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amerigo Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Amerigo Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southern Copper and Amerigo Resources

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

The idea behind Southern Copper and Amerigo Resources 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.