Correlation Between ROK Resources and Southern Cross
Can any of the company-specific risk be diversified away by investing in both ROK Resources 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 ROK Resources and Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ROK Resources and Southern Cross Media, you can compare the effects of market volatilities on ROK Resources 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 ROK Resources with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROK Resources and Southern Cross.
Diversification Opportunities for ROK Resources and Southern Cross
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ROK and Southern is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding ROK Resources 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 ROK Resources 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 ROK Resources 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 ROK Resources i.e., ROK Resources and Southern Cross go up and down completely randomly.
Pair Corralation between ROK Resources and Southern Cross
Assuming the 90 days horizon ROK Resources is expected to under-perform the Southern Cross. In addition to that, ROK Resources is 1.23 times more volatile than Southern Cross Media. It trades about -0.16 of its total potential returns per unit of risk. Southern Cross Media is currently generating about 0.18 per unit of volatility. If you would invest 9.73 in Southern Cross Media on November 3, 2024 and sell it today you would earn a total of 1.27 from holding Southern Cross Media or generate 13.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ROK Resources vs. Southern Cross Media
Performance |
| Timeline |
| ROK Resources |
| Southern Cross Media |
ROK Resources and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ROK Resources and Southern Cross
The main advantage of trading using opposite ROK Resources and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROK Resources 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.| ROK Resources vs. Legacy Education | ROK Resources vs. Apple Inc | ROK Resources vs. Microsoft | ROK Resources vs. NVIDIA |
| Southern Cross vs. Pieridae Energy Limited | Southern Cross vs. Prospera Energy | Southern Cross vs. Ngx Energy International | Southern Cross vs. Barrister Energy LLC |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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