Correlation Between De Grey and Southern Cross
Can any of the company-specific risk be diversified away by investing in both De Grey 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 De Grey and Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and Southern Cross Media, you can compare the effects of market volatilities on De Grey 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 De Grey with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Southern Cross.
Diversification Opportunities for De Grey and Southern Cross
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DEG and Southern is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining 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 De Grey 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 De Grey 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 Media has no effect on the direction of De Grey i.e., De Grey and Southern Cross go up and down completely randomly.
Pair Corralation between De Grey and Southern Cross
Assuming the 90 days trading horizon De Grey Mining is expected to generate 0.87 times more return on investment than Southern Cross. However, De Grey Mining is 1.15 times less risky than Southern Cross. It trades about 0.33 of its potential returns per unit of risk. Southern Cross Media is currently generating about 0.11 per unit of risk. If you would invest 183.00 in De Grey Mining on November 5, 2024 and sell it today you would earn a total of 18.00 from holding De Grey Mining or generate 9.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. Southern Cross Media
Performance |
| Timeline |
| De Grey Mining |
| Southern Cross Media |
De Grey and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and Southern Cross
The main advantage of trading using opposite De Grey and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey 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.| De Grey vs. Mirrabooka Investments | De Grey vs. Djerriwarrh Investments | De Grey vs. Diversified United Investment | De Grey vs. MFF Capital Investments |
| Southern Cross vs. Hutchison Telecommunications | Southern Cross vs. COAST ENTERTAINMENT HOLDINGS | Southern Cross vs. Aussie Broadband | Southern Cross vs. Torque Metals |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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