Correlation Between ZK International and Southern Copper

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

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

Diversification Opportunities for ZK International and Southern Copper

0.06

Correlation Coefficient

ZK International  Southern Copper

Significant diversification

The 3 months correlation between ZKIN and Southern is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding ZK International Group and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and ZK International 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 ZK International Group 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 ZK International i.e., ZK International and Southern Copper go up and down completely randomly.

Pair Corralation between ZK International and Southern Copper

Given the investment horizon of 90 days ZK International Group is expected to under-perform the Southern Copper. In addition to that, ZK International is 4.42 times more volatile than Southern Copper. It trades about -0.18 of its total potential returns per unit of risk. Southern Copper is currently generating about 0.05 per unit of volatility. If you would invest  9,222  in Southern Copper on December 21, 2024 and sell it today you would earn a total of  451.00  from holding Southern Copper or generate 4.89% return on investment over 90 days.

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

ZK International Group  vs.  Southern Copper

ZK International

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZK International Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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.

Pair Trading with ZK International and Southern Copper

The main advantage of trading using opposite ZK International and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZK International 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 ZK International Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.