Correlation Between Southern Copper and Copper Fox

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

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

Diversification Opportunities for Southern Copper and Copper Fox

0.04

Correlation Coefficient

Southern Copper  Copper Fox

Significant diversification

The 3 months correlation between Southern and Copper is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and Copper Fox Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper Fox Metals 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 Copper Fox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper Fox Metals has no effect on the direction of Southern Copper i.e., Southern Copper and Copper Fox go up and down completely randomly.

Pair Corralation between Southern Copper and Copper Fox

Given the investment horizon of 90 days Southern Copper is expected to under-perform the Copper Fox. But the stock apears to be less risky and, when comparing its historical volatility, Southern Copper is 2.51 times less risky than Copper Fox. The stock trades about -0.04 of its potential returns per unit of risk. The Copper Fox Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Copper Fox Metals on September 22, 2024 and sell it today you would lose (2.00) from holding Copper Fox Metals or give up 10.53% of portfolio value over 90 days.

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

Southern Copper  vs.  Copper Fox Metals

Southern Copper

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Copper Fox Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copper Fox Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Southern Copper and Copper Fox

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

The idea behind Southern Copper and Copper Fox Metals 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.