Correlation Between South Star and Global Energy
Can any of the company-specific risk be diversified away by investing in both South Star and Global 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 South Star and Global Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South Star Battery and Global Energy Metals, you can compare the effects of market volatilities on South Star and Global 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 South Star with a short position of Global Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Star and Global Energy.
Diversification Opportunities for South Star and Global Energy
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between South and Global is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding South Star Battery and Global Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Energy Metals and South Star 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 South Star Battery are associated (or correlated) with Global Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Energy Metals has no effect on the direction of South Star i.e., South Star and Global Energy go up and down completely randomly.
Pair Corralation between South Star and Global Energy
Assuming the 90 days horizon South Star Battery is expected to generate 0.69 times more return on investment than Global Energy. However, South Star Battery is 1.45 times less risky than Global Energy. It trades about 0.03 of its potential returns per unit of risk. Global Energy Metals is currently generating about -0.02 per unit of risk. If you would invest 37.00 in South Star Battery on August 26, 2024 and sell it today you would earn a total of 6.00 from holding South Star Battery or generate 16.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.83% |
| Values | Daily Returns |
South Star Battery vs. Global Energy Metals
Performance |
| Timeline |
| South Star Battery |
| Global Energy Metals |
South Star and Global Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Star and Global Energy
The main advantage of trading using opposite South Star and Global Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Star position performs unexpectedly, Global 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 Global Energy will offset losses from the drop in Global Energy's long position.| South Star vs. Norra Metals Corp | South Star vs. ZincX Resources Corp | South Star vs. Nuinsco Resources Limited | South Star vs. Mundoro Capital |
| Global Energy vs. Norra Metals Corp | Global Energy vs. ZincX Resources Corp | Global Energy vs. Nuinsco Resources Limited | Global Energy vs. South Star Battery |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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