Correlation Between FIBRA Storage and Southern Copper

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

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

Diversification Opportunities for FIBRA Storage and Southern Copper

-0.7

Correlation Coefficient

FIBRA Storage  Southern Copper

Excellent diversification

The 3 months correlation between FIBRA and Southern is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding FIBRA Storage and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and FIBRA Storage 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 FIBRA Storage 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 has no effect on the direction of FIBRA Storage i.e., FIBRA Storage and Southern Copper go up and down completely randomly.

Pair Corralation between FIBRA Storage and Southern Copper

Assuming the 90 days trading horizon FIBRA Storage is expected to generate 2.4 times less return on investment than Southern Copper. But when comparing it to its historical volatility, FIBRA Storage is 1.82 times less risky than Southern Copper. It trades about 0.04 of its potential returns per unit of risk. Southern Copper is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  123,788  in Southern Copper on December 27, 2024 and sell it today you would earn a total of  67,212  from holding Southern Copper or generate 54.3% return on investment over 90 days.

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

FIBRA Storage  vs.  Southern Copper

FIBRA Storage

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FIBRA Storage are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, FIBRA Storage exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with FIBRA Storage and Southern Copper

The main advantage of trading using opposite FIBRA Storage and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIBRA Storage 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 FIBRA Storage and Southern Copper 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.