Correlation Between Scotiabank Peru and Southern Copper

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

By analyzing existing cross correlation between Scotiabank Peru SAA and Southern Copper Corp, you can compare the effects of market volatilities on Scotiabank Peru and Southern Copper 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 Scotiabank Peru with a short position of Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scotiabank Peru and Southern Copper.

Diversification Opportunities for Scotiabank Peru and Southern Copper

-0.05

Correlation Coefficient

Scotiabank Peru  Southern Copper

Good diversification

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

Pair Corralation between Scotiabank Peru and Southern Copper

Assuming the 90 days trading horizon Scotiabank Peru is expected to generate 1.11 times less return on investment than Southern Copper. In addition to that, Scotiabank Peru is 1.22 times more volatile than Southern Copper Corp. It trades about 0.05 of its total potential returns per unit of risk. Southern Copper Corp is currently generating about 0.07 per unit of volatility. If you would invest  9,410  in Southern Copper Corp on December 27, 2024 and sell it today you would earn a total of  740.00  from holding Southern Copper Corp or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	32.2%
Values	Daily Returns

Scotiabank Peru SAA  vs.  Southern Copper Corp

Scotiabank Peru SAA

Risk-Adjusted Performance

Insignificant

Over the last 90 days Scotiabank Peru SAA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unfluctuating basic indicators, Scotiabank Peru may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Southern Copper Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Copper Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Southern Copper may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Scotiabank Peru and Southern Copper

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

The idea behind Scotiabank Peru SAA and Southern Copper Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.