Correlation Between Collins Foods and Southern Hemisphere
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Southern Hemisphere 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 Collins Foods and Southern Hemisphere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Southern Hemisphere Mining, you can compare the effects of market volatilities on Collins Foods and Southern Hemisphere 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 Collins Foods with a short position of Southern Hemisphere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Southern Hemisphere.
Diversification Opportunities for Collins Foods and Southern Hemisphere
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Collins and Southern is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Southern Hemisphere Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Hemisphere and Collins Foods 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 Collins Foods are associated (or correlated) with Southern Hemisphere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Hemisphere has no effect on the direction of Collins Foods i.e., Collins Foods and Southern Hemisphere go up and down completely randomly.
Pair Corralation between Collins Foods and Southern Hemisphere
Assuming the 90 days trading horizon Collins Foods is expected to generate 5.7 times less return on investment than Southern Hemisphere. But when comparing it to its historical volatility, Collins Foods is 5.18 times less risky than Southern Hemisphere. It trades about 0.15 of its potential returns per unit of risk. Southern Hemisphere Mining is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3.10 in Southern Hemisphere Mining on November 6, 2024 and sell it today you would earn a total of 0.60 from holding Southern Hemisphere Mining or generate 19.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Southern Hemisphere Mining
Performance |
| Timeline |
| Collins Foods |
| Southern Hemisphere |
Collins Foods and Southern Hemisphere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Southern Hemisphere
The main advantage of trading using opposite Collins Foods and Southern Hemisphere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Southern Hemisphere 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 Hemisphere will offset losses from the drop in Southern Hemisphere's long position.| Collins Foods vs. Regal Funds Management | Collins Foods vs. Microequities Asset Management | Collins Foods vs. Ras Technology Holdings | Collins Foods vs. Super Retail Group |
| Southern Hemisphere vs. Advanced Braking Technology | Southern Hemisphere vs. Readytech Holdings | Southern Hemisphere vs. Duxton Broadacre Farms | Southern Hemisphere vs. Mayfield Childcare |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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