Correlation Between Energy Technologies and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Energy Technologies 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 Energy Technologies and Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Technologies Limited and Southern Cross Media, you can compare the effects of market volatilities on Energy Technologies 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 Energy Technologies with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Technologies and Southern Cross.
Diversification Opportunities for Energy Technologies and Southern Cross
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Energy and Southern is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Energy Technologies Limited 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 Energy Technologies 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 Energy Technologies Limited 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 Energy Technologies i.e., Energy Technologies and Southern Cross go up and down completely randomly.
Pair Corralation between Energy Technologies and Southern Cross
Assuming the 90 days trading horizon Energy Technologies Limited is expected to under-perform the Southern Cross. In addition to that, Energy Technologies is 2.41 times more volatile than Southern Cross Media. It trades about -0.13 of its total potential returns per unit of risk. Southern Cross Media is currently generating about 0.11 per unit of volatility. If you would invest 60.00 in Southern Cross Media on November 6, 2024 and sell it today you would earn a total of 2.00 from holding Southern Cross Media or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Technologies Limited vs. Southern Cross Media
Performance |
| Timeline |
| Energy Technologies |
| Southern Cross Media |
Energy Technologies and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Technologies and Southern Cross
The main advantage of trading using opposite Energy Technologies and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Technologies 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.| Energy Technologies vs. Hotel Property Investments | Energy Technologies vs. Dynamic Drill And | Energy Technologies vs. Gtn | Energy Technologies vs. Nufarm |
| Southern Cross vs. Macquarie Technology Group | Southern Cross vs. MotorCycle Holdings | Southern Cross vs. Clime Investment Management | Southern Cross vs. Cleanaway Waste Management |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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