Correlation Between Southern Hemisphere and Mount Gibson
Can any of the company-specific risk be diversified away by investing in both Southern Hemisphere and Mount Gibson 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 Hemisphere and Mount Gibson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Hemisphere Mining and Mount Gibson Iron, you can compare the effects of market volatilities on Southern Hemisphere and Mount Gibson 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 Hemisphere with a short position of Mount Gibson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Hemisphere and Mount Gibson.
Diversification Opportunities for Southern Hemisphere and Mount Gibson
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Southern and Mount is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Southern Hemisphere Mining and Mount Gibson Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mount Gibson Iron and Southern Hemisphere 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 Hemisphere Mining are associated (or correlated) with Mount Gibson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mount Gibson Iron has no effect on the direction of Southern Hemisphere i.e., Southern Hemisphere and Mount Gibson go up and down completely randomly.
Pair Corralation between Southern Hemisphere and Mount Gibson
Assuming the 90 days trading horizon Southern Hemisphere Mining is expected to generate 3.33 times more return on investment than Mount Gibson. However, Southern Hemisphere is 3.33 times more volatile than Mount Gibson Iron. It trades about 0.13 of its potential returns per unit of risk. Mount Gibson Iron is currently generating about 0.19 per unit of risk. If you would invest 3.00 in Southern Hemisphere Mining on October 29, 2024 and sell it today you would earn a total of 0.40 from holding Southern Hemisphere Mining or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Hemisphere Mining vs. Mount Gibson Iron
Performance |
| Timeline |
| Southern Hemisphere |
| Mount Gibson Iron |
Southern Hemisphere and Mount Gibson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Hemisphere and Mount Gibson
The main advantage of trading using opposite Southern Hemisphere and Mount Gibson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Hemisphere position performs unexpectedly, Mount Gibson 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 Mount Gibson will offset losses from the drop in Mount Gibson's long position.| Southern Hemisphere vs. Northern Star Resources | Southern Hemisphere vs. Evolution Mining | Southern Hemisphere vs. Bluescope Steel | Southern Hemisphere vs. De Grey Mining |
| Mount Gibson vs. Charter Hall Retail | Mount Gibson vs. Playside Studios | Mount Gibson vs. Super Retail Group | Mount Gibson vs. EMvision Medical Devices |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Stocks Directory Find actively traded stocks across global markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |