Correlation Between Black Rock and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Black Rock and Southern Cross 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 Black Rock and Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Rock Mining and Southern Cross Gold, you can compare the effects of market volatilities on Black Rock and Southern Cross 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 Black Rock with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Rock and Southern Cross.
Diversification Opportunities for Black Rock and Southern Cross
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Black and Southern is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Black Rock Mining and Southern Cross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Gold and Black Rock 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 Black Rock Mining are associated (or correlated) with Southern Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Cross Gold has no effect on the direction of Black Rock i.e., Black Rock and Southern Cross go up and down completely randomly.
Pair Corralation between Black Rock and Southern Cross
Assuming the 90 days trading horizon Black Rock Mining is expected to generate 1.2 times more return on investment than Southern Cross. However, Black Rock is 1.2 times more volatile than Southern Cross Gold. It trades about -0.03 of its potential returns per unit of risk. Southern Cross Gold is currently generating about -0.05 per unit of risk. If you would invest 3.50 in Black Rock Mining on October 23, 2024 and sell it today you would lose (0.10) from holding Black Rock Mining or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Black Rock Mining vs. Southern Cross Gold
Performance |
| Timeline |
| Black Rock Mining |
| Southern Cross Gold |
Black Rock and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Rock and Southern Cross
The main advantage of trading using opposite Black Rock and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Rock position performs unexpectedly, Southern Cross 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 Cross will offset losses from the drop in Southern Cross' long position.| Black Rock vs. Autosports Group | Black Rock vs. ARN Media Limited | Black Rock vs. Aspire Mining | Black Rock vs. Duketon Mining |
| Southern Cross vs. Northern Star Resources | Southern Cross vs. Evolution Mining | Southern Cross vs. Bluescope Steel | Southern Cross vs. De Grey Mining |
Check out your portfolio center.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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