Correlation Between Thor Mining and Southern Copper

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

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

Diversification Opportunities for Thor Mining and Southern Copper

0.35

Correlation Coefficient

Thor Mining  Southern Copper

Weak diversification

The 3 months correlation between Thor and Southern is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Thor Mining PLC 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 Thor Mining 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 Thor Mining PLC 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 Thor Mining i.e., Thor Mining and Southern Copper go up and down completely randomly.

Pair Corralation between Thor Mining and Southern Copper

Assuming the 90 days trading horizon Thor Mining PLC is expected to under-perform the Southern Copper. In addition to that, Thor Mining is 2.46 times more volatile than Southern Copper Corp. It trades about -0.09 of its total potential returns per unit of risk. Southern Copper Corp is currently generating about -0.2 per unit of volatility. If you would invest  10,126  in Southern Copper Corp on September 24, 2024 and sell it today you would lose (929.00) from holding Southern Copper Corp or give up 9.17% of portfolio value over 90 days.

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

Thor Mining PLC  vs.  Southern Copper Corp

Thor Mining PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thor Mining PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Southern Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Thor Mining and Southern Copper

The main advantage of trading using opposite Thor Mining and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Mining 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 Thor Mining PLC 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.