Correlation Between Southern Energy and Rubellite Energy
Can any of the company-specific risk be diversified away by investing in both Southern Energy and Rubellite Energy 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 Energy and Rubellite Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Energy Corp and Rubellite Energy, you can compare the effects of market volatilities on Southern Energy and Rubellite Energy 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 Energy with a short position of Rubellite Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Energy and Rubellite Energy.
Diversification Opportunities for Southern Energy and Rubellite Energy
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southern and Rubellite is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Southern Energy Corp and Rubellite Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubellite Energy and Southern Energy 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 Energy Corp are associated (or correlated) with Rubellite Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubellite Energy has no effect on the direction of Southern Energy i.e., Southern Energy and Rubellite Energy go up and down completely randomly.
Pair Corralation between Southern Energy and Rubellite Energy
Assuming the 90 days horizon Southern Energy Corp is expected to under-perform the Rubellite Energy. In addition to that, Southern Energy is 1.99 times more volatile than Rubellite Energy. It trades about -0.12 of its total potential returns per unit of risk. Rubellite Energy is currently generating about 0.0 per unit of volatility. If you would invest 229.00 in Rubellite Energy on September 1, 2024 and sell it today you would lose (6.00) from holding Rubellite Energy or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Southern Energy Corp vs. Rubellite Energy
Performance |
| Timeline |
| Southern Energy Corp |
| Rubellite Energy |
Southern Energy and Rubellite Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Energy and Rubellite Energy
The main advantage of trading using opposite Southern Energy and Rubellite Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Energy position performs unexpectedly, Rubellite Energy 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 Rubellite Energy will offset losses from the drop in Rubellite Energy's long position.The idea behind Southern Energy Corp and Rubellite Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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