Correlation Between Southern Empire and Patagonia Gold
Can any of the company-specific risk be diversified away by investing in both Southern Empire and Patagonia Gold 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 Southern Empire and Patagonia Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Empire Resources and Patagonia Gold Corp, you can compare the effects of market volatilities on Southern Empire and Patagonia Gold 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 Southern Empire with a short position of Patagonia Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Empire and Patagonia Gold.
Diversification Opportunities for Southern Empire and Patagonia Gold
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Southern and Patagonia is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Southern Empire Resources and Patagonia Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patagonia Gold Corp and Southern Empire 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 Southern Empire Resources are associated (or correlated) with Patagonia Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patagonia Gold Corp has no effect on the direction of Southern Empire i.e., Southern Empire and Patagonia Gold go up and down completely randomly.
Pair Corralation between Southern Empire and Patagonia Gold
Assuming the 90 days horizon Southern Empire Resources is expected to generate 1.16 times more return on investment than Patagonia Gold. However, Southern Empire is 1.16 times more volatile than Patagonia Gold Corp. It trades about 0.17 of its potential returns per unit of risk. Patagonia Gold Corp is currently generating about 0.17 per unit of risk. If you would invest 2.50 in Southern Empire Resources on October 20, 2024 and sell it today you would earn a total of 1.00 from holding Southern Empire Resources or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Southern Empire Resources vs. Patagonia Gold Corp
Performance |
| Timeline |
| Southern Empire Resources |
| Patagonia Gold Corp |
Southern Empire and Patagonia Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Empire and Patagonia Gold
The main advantage of trading using opposite Southern Empire and Patagonia Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Empire position performs unexpectedly, Patagonia Gold 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 Patagonia Gold will offset losses from the drop in Patagonia Gold's long position.| Southern Empire vs. First Majestic Silver | Southern Empire vs. Ivanhoe Energy | Southern Empire vs. Flinders Resources Limited | Southern Empire vs. Orezone Gold Corp |
| Patagonia Gold vs. Rover Metals Corp | Patagonia Gold vs. Southern Empire Resources | Patagonia Gold vs. Sarama Resource | Patagonia Gold vs. Awale Resources |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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