Correlation Between Southern Cross and RLF AgTech
Can any of the company-specific risk be diversified away by investing in both Southern Cross and RLF AgTech 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 RLF AgTech 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 RLF AgTech, you can compare the effects of market volatilities on Southern Cross and RLF AgTech 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 RLF AgTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and RLF AgTech.
Diversification Opportunities for Southern Cross and RLF AgTech
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southern and RLF is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Gold and RLF AgTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLF AgTech 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 RLF AgTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLF AgTech has no effect on the direction of Southern Cross i.e., Southern Cross and RLF AgTech go up and down completely randomly.
Pair Corralation between Southern Cross and RLF AgTech
Assuming the 90 days trading horizon Southern Cross Gold is expected to generate 1.76 times more return on investment than RLF AgTech. However, Southern Cross is 1.76 times more volatile than RLF AgTech. It trades about 0.18 of its potential returns per unit of risk. RLF AgTech is currently generating about -0.08 per unit of risk. If you would invest 307.00 in Southern Cross Gold on September 13, 2024 and sell it today you would earn a total of 70.00 from holding Southern Cross Gold or generate 22.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Cross Gold vs. RLF AgTech
Performance |
| Timeline |
| Southern Cross Gold |
| RLF AgTech |
Southern Cross and RLF AgTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Cross and RLF AgTech
The main advantage of trading using opposite Southern Cross and RLF AgTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Cross position performs unexpectedly, RLF AgTech 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 RLF AgTech will offset losses from the drop in RLF AgTech's long position.| Southern Cross vs. MA Financial Group | Southern Cross vs. Wt Financial Group | Southern Cross vs. Perpetual Credit Income | Southern Cross vs. Insignia Financial |
| RLF AgTech vs. Northern Star Resources | RLF AgTech vs. Evolution Mining | RLF AgTech vs. Bluescope Steel | RLF AgTech 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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