Correlation Between Collins Foods and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Collins Foods 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 Collins Foods and Southern Cross 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 Cross Media, you can compare the effects of market volatilities on Collins Foods 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 Collins Foods with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Southern Cross.
Diversification Opportunities for Collins Foods and Southern Cross
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Collins and Southern is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Southern Cross Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Media 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 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 Media has no effect on the direction of Collins Foods i.e., Collins Foods and Southern Cross go up and down completely randomly.
Pair Corralation between Collins Foods and Southern Cross
Assuming the 90 days trading horizon Collins Foods is expected to under-perform the Southern Cross. But the stock apears to be less risky and, when comparing its historical volatility, Collins Foods is 2.2 times less risky than Southern Cross. The stock trades about -0.32 of its potential returns per unit of risk. The Southern Cross Media is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 55.00 in Southern Cross Media on October 30, 2024 and sell it today you would earn a total of 5.00 from holding Southern Cross Media or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Southern Cross Media
Performance |
| Timeline |
| Collins Foods |
| Southern Cross Media |
Collins Foods and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Southern Cross
The main advantage of trading using opposite Collins Foods and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods 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.| Collins Foods vs. MFF Capital Investments | Collins Foods vs. Credit Clear | Collins Foods vs. Macquarie Bank Limited | Collins Foods vs. Bell Financial Group |
| Southern Cross vs. Farm Pride Foods | Southern Cross vs. Data3 | Southern Cross vs. Beston Global Food | Southern Cross vs. AiMedia Technologies |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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