Correlation Between Southern Cross and Prospera Energy
Can any of the company-specific risk be diversified away by investing in both Southern Cross and Prospera 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 Cross and Prospera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Cross Media and Prospera Energy, you can compare the effects of market volatilities on Southern Cross and Prospera 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 Cross with a short position of Prospera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and Prospera Energy.
Diversification Opportunities for Southern Cross and Prospera Energy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southern and Prospera is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Media and Prospera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospera Energy and Southern Cross 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 Cross Media are associated (or correlated) with Prospera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospera Energy has no effect on the direction of Southern Cross i.e., Southern Cross and Prospera Energy go up and down completely randomly.
Pair Corralation between Southern Cross and Prospera Energy
Assuming the 90 days horizon Southern Cross is expected to generate 3.13 times less return on investment than Prospera Energy. But when comparing it to its historical volatility, Southern Cross Media is 1.75 times less risky than Prospera Energy. It trades about 0.18 of its potential returns per unit of risk. Prospera Energy is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2.10 in Prospera Energy on November 3, 2024 and sell it today you would earn a total of 0.98 from holding Prospera Energy or generate 46.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Cross Media vs. Prospera Energy
Performance |
| Timeline |
| Southern Cross Media |
| Prospera Energy |
Southern Cross and Prospera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Cross and Prospera Energy
The main advantage of trading using opposite Southern Cross and Prospera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Cross position performs unexpectedly, Prospera 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 Prospera Energy will offset losses from the drop in Prospera Energy's long position.| Southern Cross vs. Pieridae Energy Limited | Southern Cross vs. Prospera Energy | Southern Cross vs. Ngx Energy International | Southern Cross vs. Barrister Energy LLC |
| Prospera Energy vs. ROK Resources | Prospera Energy vs. PetroShale | Prospera Energy vs. Pieridae Energy Limited | Prospera Energy vs. Bengal Energy |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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