Correlation Between Home Consortium and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Home Consortium 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 Home Consortium and Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Consortium and Southern Cross Media, you can compare the effects of market volatilities on Home Consortium 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 Home Consortium with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Consortium and Southern Cross.
Diversification Opportunities for Home Consortium and Southern Cross
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Home and Southern is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Home Consortium 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 Home Consortium 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 Home Consortium 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 Home Consortium i.e., Home Consortium and Southern Cross go up and down completely randomly.
Pair Corralation between Home Consortium and Southern Cross
Assuming the 90 days trading horizon Home Consortium is expected to generate 2.73 times less return on investment than Southern Cross. But when comparing it to its historical volatility, Home Consortium is 1.1 times less risky than Southern Cross. It trades about 0.06 of its potential returns per unit of risk. Southern Cross Media is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 47.00 in Southern Cross Media on October 14, 2024 and sell it today you would earn a total of 15.00 from holding Southern Cross Media or generate 31.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Consortium vs. Southern Cross Media
Performance |
| Timeline |
| Home Consortium |
| Southern Cross Media |
Home Consortium and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Consortium and Southern Cross
The main advantage of trading using opposite Home Consortium and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Consortium 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.| Home Consortium vs. MetalsGrove Mining | Home Consortium vs. Bailador Technology Invest | Home Consortium vs. Centuria Industrial Reit | Home Consortium vs. Maggie Beer Holdings |
| Southern Cross vs. National Storage REIT | Southern Cross vs. BKI Investment | Southern Cross vs. Aristocrat Leisure | Southern Cross vs. Autosports Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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