Correlation Between Crown LNG and Southern
Can any of the company-specific risk be diversified away by investing in both Crown LNG and Southern 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 Crown LNG and Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown LNG Holdings and Southern Co, you can compare the effects of market volatilities on Crown LNG and Southern 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 Crown LNG with a short position of Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown LNG and Southern.
Diversification Opportunities for Crown LNG and Southern
Excellent diversification
The 3 months correlation between Crown and Southern is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Crown LNG Holdings and Southern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern and Crown LNG 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 Crown LNG Holdings are associated (or correlated) with Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of Crown LNG i.e., Crown LNG and Southern go up and down completely randomly.
Pair Corralation between Crown LNG and Southern
Assuming the 90 days horizon Crown LNG Holdings is expected to generate 51.75 times more return on investment than Southern. However, Crown LNG is 51.75 times more volatile than Southern Co. It trades about 0.11 of its potential returns per unit of risk. Southern Co is currently generating about 0.04 per unit of risk. If you would invest 3.75 in Crown LNG Holdings on August 24, 2024 and sell it today you would lose (0.74) from holding Crown LNG Holdings or give up 19.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 39.2% |
| Values | Daily Returns |
Crown LNG Holdings vs. Southern Co
Performance |
| Timeline |
| Crown LNG Holdings |
| Southern |
Crown LNG and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown LNG and Southern
The main advantage of trading using opposite Crown LNG and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown LNG position performs unexpectedly, Southern 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 will offset losses from the drop in Southern's long position.| Crown LNG vs. Eni SpA ADR | Crown LNG vs. BP PLC ADR | Crown LNG vs. Ecopetrol SA ADR | Crown LNG vs. Suncor Energy |
| Southern vs. Atmos Energy | Southern vs. Emerson Radio | Southern vs. Antero Midstream Partners | Southern vs. Playtech plc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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