Correlation Between Southern Cross and Carnegie Clean
Can any of the company-specific risk be diversified away by investing in both Southern Cross and Carnegie Clean 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 Carnegie Clean 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 Carnegie Clean Energy, you can compare the effects of market volatilities on Southern Cross and Carnegie Clean 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 Carnegie Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and Carnegie Clean.
Diversification Opportunities for Southern Cross and Carnegie Clean
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Southern and Carnegie is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Gold and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean 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 Gold are associated (or correlated) with Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of Southern Cross i.e., Southern Cross and Carnegie Clean go up and down completely randomly.
Pair Corralation between Southern Cross and Carnegie Clean
Assuming the 90 days trading horizon Southern Cross is expected to generate 5.38 times less return on investment than Carnegie Clean. But when comparing it to its historical volatility, Southern Cross Gold is 4.49 times less risky than Carnegie Clean. It trades about 0.08 of its potential returns per unit of risk. Carnegie Clean Energy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 7.50 in Carnegie Clean Energy on September 12, 2024 and sell it today you would lose (3.60) from holding Carnegie Clean Energy or give up 48.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Cross Gold vs. Carnegie Clean Energy
Performance |
| Timeline |
| Southern Cross Gold |
| Carnegie Clean Energy |
Southern Cross and Carnegie Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Cross and Carnegie Clean
The main advantage of trading using opposite Southern Cross and Carnegie Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Cross position performs unexpectedly, Carnegie Clean 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 Carnegie Clean will offset losses from the drop in Carnegie Clean's long position.| Southern Cross vs. Farm Pride Foods | Southern Cross vs. Iron Road | Southern Cross vs. Bluescope Steel | Southern Cross vs. Spirit Telecom |
| Carnegie Clean vs. Queste Communications | Carnegie Clean vs. Latitude Financial Services | Carnegie Clean vs. Diversified United Investment | Carnegie Clean vs. Insignia Financial |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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