Correlation Between Southern Cross and TasFoods
Can any of the company-specific risk be diversified away by investing in both Southern Cross and TasFoods 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 TasFoods 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 TasFoods, you can compare the effects of market volatilities on Southern Cross and TasFoods 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 TasFoods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and TasFoods.
Diversification Opportunities for Southern Cross and TasFoods
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Southern and TasFoods is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Gold and TasFoods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TasFoods 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 TasFoods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TasFoods has no effect on the direction of Southern Cross i.e., Southern Cross and TasFoods go up and down completely randomly.
Pair Corralation between Southern Cross and TasFoods
Assuming the 90 days trading horizon Southern Cross Gold is expected to generate 1.24 times more return on investment than TasFoods. However, Southern Cross is 1.24 times more volatile than TasFoods. It trades about 0.08 of its potential returns per unit of risk. TasFoods is currently generating about 0.09 per unit of risk. If you would invest 323.00 in Southern Cross Gold on September 12, 2024 and sell it today you would earn a total of 24.00 from holding Southern Cross Gold or generate 7.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Cross Gold vs. TasFoods
Performance |
| Timeline |
| Southern Cross Gold |
| TasFoods |
Southern Cross and TasFoods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Cross and TasFoods
The main advantage of trading using opposite Southern Cross and TasFoods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Cross position performs unexpectedly, TasFoods 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 TasFoods will offset losses from the drop in TasFoods' long position.| Southern Cross vs. Farm Pride Foods | Southern Cross vs. Iron Road | Southern Cross vs. Bluescope Steel | Southern Cross vs. Spirit Telecom |
| TasFoods vs. Tlou Energy | TasFoods vs. Southern Cross Gold | TasFoods vs. Minbos Resources | TasFoods vs. Elevate Uranium |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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