Correlation Between CSL and Southern Cross
Can any of the company-specific risk be diversified away by investing in both CSL 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 CSL and Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and Southern Cross Media, you can compare the effects of market volatilities on CSL 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 CSL with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Southern Cross.
Diversification Opportunities for CSL and Southern Cross
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CSL and Southern is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding CSL 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 CSL 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 CSL 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 CSL i.e., CSL and Southern Cross go up and down completely randomly.
Pair Corralation between CSL and Southern Cross
Assuming the 90 days trading horizon CSL is expected to generate 0.35 times more return on investment than Southern Cross. However, CSL is 2.89 times less risky than Southern Cross. It trades about 0.05 of its potential returns per unit of risk. Southern Cross Media is currently generating about -0.05 per unit of risk. If you would invest 25,472 in CSL on October 11, 2024 and sell it today you would earn a total of 3,361 from holding CSL or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSL vs. Southern Cross Media
Performance |
| Timeline |
| CSL |
| Southern Cross Media |
CSL and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSL and Southern Cross
The main advantage of trading using opposite CSL and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL 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.| CSL vs. Charter Hall Education | CSL vs. Medibank Private | CSL vs. Australian Strategic Materials | CSL vs. Sequoia Financial Group |
| Southern Cross vs. Aneka Tambang Tbk | Southern Cross vs. Commonwealth Bank | Southern Cross vs. Commonwealth Bank of | Southern Cross vs. Australia and New |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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