Correlation Between Southern Cross and Bio Gene
Can any of the company-specific risk be diversified away by investing in both Southern Cross and Bio Gene 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 Bio Gene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Cross Gold and Bio Gene Technology, you can compare the effects of market volatilities on Southern Cross and Bio Gene 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 Bio Gene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and Bio Gene.
Diversification Opportunities for Southern Cross and Bio Gene
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southern and Bio is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Gold and Bio Gene Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Gene Technology 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 Gold are associated (or correlated) with Bio Gene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Gene Technology has no effect on the direction of Southern Cross i.e., Southern Cross and Bio Gene go up and down completely randomly.
Pair Corralation between Southern Cross and Bio Gene
Assuming the 90 days trading horizon Southern Cross Gold is expected to generate 1.0 times more return on investment than Bio Gene. However, Southern Cross Gold is 1.0 times less risky than Bio Gene. It trades about -0.03 of its potential returns per unit of risk. Bio Gene Technology is currently generating about -0.16 per unit of risk. If you would invest 318.00 in Southern Cross Gold on September 2, 2024 and sell it today you would lose (22.00) from holding Southern Cross Gold or give up 6.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Cross Gold vs. Bio Gene Technology
Performance |
| Timeline |
| Southern Cross Gold |
| Bio Gene Technology |
Southern Cross and Bio Gene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Cross and Bio Gene
The main advantage of trading using opposite Southern Cross and Bio Gene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Cross position performs unexpectedly, Bio Gene 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 Bio Gene will offset losses from the drop in Bio Gene's long position.| Southern Cross vs. Bio Gene Technology | Southern Cross vs. Aussie Broadband | Southern Cross vs. Ainsworth Game Technology | Southern Cross vs. Computershare |
| Bio Gene vs. Northern Star Resources | Bio Gene vs. Evolution Mining | Bio Gene vs. Bluescope Steel | Bio Gene vs. Sandfire Resources NL |
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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