Correlation Between South32 and Gensource Potash
Can any of the company-specific risk be diversified away by investing in both South32 and Gensource Potash 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 South32 and Gensource Potash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South32 Limited and Gensource Potash, you can compare the effects of market volatilities on South32 and Gensource Potash 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 South32 with a short position of Gensource Potash. Check out your portfolio center. Please also check ongoing floating volatility patterns of South32 and Gensource Potash.
Diversification Opportunities for South32 and Gensource Potash
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between South32 and Gensource is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding South32 Limited and Gensource Potash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gensource Potash and South32 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 South32 Limited are associated (or correlated) with Gensource Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gensource Potash has no effect on the direction of South32 i.e., South32 and Gensource Potash go up and down completely randomly.
Pair Corralation between South32 and Gensource Potash
Assuming the 90 days horizon South32 is expected to generate 120.93 times less return on investment than Gensource Potash. But when comparing it to its historical volatility, South32 Limited is 17.53 times less risky than Gensource Potash. It trades about 0.02 of its potential returns per unit of risk. Gensource Potash is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Gensource Potash on September 3, 2024 and sell it today you would lose (2.00) from holding Gensource Potash or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.32% |
| Values | Daily Returns |
South32 Limited vs. Gensource Potash
Performance |
| Timeline |
| South32 Limited |
| Gensource Potash |
South32 and Gensource Potash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South32 and Gensource Potash
The main advantage of trading using opposite South32 and Gensource Potash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South32 position performs unexpectedly, Gensource Potash 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 Gensource Potash will offset losses from the drop in Gensource Potash's long position.| South32 vs. IGO Limited | South32 vs. Anglo American PLC | South32 vs. TNG Limited | South32 vs. Amarc Resources |
| Gensource Potash vs. Huntsman Exploration | Gensource Potash vs. Aurelia Metals Limited | Gensource Potash vs. Adriatic Metals PLC | Gensource Potash vs. American Helium |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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