Correlation Between Southern Cross and ARN Media
Can any of the company-specific risk be diversified away by investing in both Southern Cross and ARN Media 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 ARN Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Cross Media and ARN Media Limited, you can compare the effects of market volatilities on Southern Cross and ARN Media 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 ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and ARN Media.
Diversification Opportunities for Southern Cross and ARN Media
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southern and ARN is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Media and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media Limited 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 Media are associated (or correlated) with ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of Southern Cross i.e., Southern Cross and ARN Media go up and down completely randomly.
Pair Corralation between Southern Cross and ARN Media
Assuming the 90 days trading horizon Southern Cross Media is expected to generate 1.07 times more return on investment than ARN Media. However, Southern Cross is 1.07 times more volatile than ARN Media Limited. It trades about -0.09 of its potential returns per unit of risk. ARN Media Limited is currently generating about -0.15 per unit of risk. If you would invest 63.00 in Southern Cross Media on October 28, 2024 and sell it today you would lose (3.00) from holding Southern Cross Media or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Cross Media vs. ARN Media Limited
Performance |
| Timeline |
| Southern Cross Media |
| ARN Media Limited |
Southern Cross and ARN Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Cross and ARN Media
The main advantage of trading using opposite Southern Cross and ARN Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Cross position performs unexpectedly, ARN Media 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 ARN Media will offset losses from the drop in ARN Media's long position.| Southern Cross vs. Lendlease Group | Southern Cross vs. Epsilon Healthcare | Southern Cross vs. Oceania Healthcare | Southern Cross vs. Legacy Iron Ore |
| ARN Media vs. Evolution Mining | ARN Media vs. Charter Hall Education | ARN Media vs. Rand Mining | ARN Media vs. Talisman Mining |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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