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
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Southern and Prospera is 0.8. 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 Media is expected to under-perform the Prospera Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, Southern Cross Media is 1.45 times less risky than Prospera Energy. The otc stock trades about -0.07 of its potential returns per unit of risk. The Prospera Energy is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 7.13 in Prospera Energy on August 26, 2024 and sell it today you would lose (4.79) from holding Prospera Energy or give up 67.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| 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. Permian Resources | Southern Cross vs. Devon Energy | Southern Cross vs. EOG Resources | Southern Cross vs. Coterra Energy |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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