Correlation Between Southern Cross and Australian Critical
Can any of the company-specific risk be diversified away by investing in both Southern Cross and Australian Critical 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 Australian Critical 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 Australian Critical Minerals, you can compare the effects of market volatilities on Southern Cross and Australian Critical 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 Australian Critical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and Australian Critical.
Diversification Opportunities for Southern Cross and Australian Critical
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southern and Australian is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Media and Australian Critical Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Critical 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 Australian Critical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Critical has no effect on the direction of Southern Cross i.e., Southern Cross and Australian Critical go up and down completely randomly.
Pair Corralation between Southern Cross and Australian Critical
Assuming the 90 days trading horizon Southern Cross Media is expected to under-perform the Australian Critical. But the stock apears to be less risky and, when comparing its historical volatility, Southern Cross Media is 1.83 times less risky than Australian Critical. The stock trades about -0.03 of its potential returns per unit of risk. The Australian Critical Minerals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 9.40 in Australian Critical Minerals on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Australian Critical Minerals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Cross Media vs. Australian Critical Minerals
Performance |
| Timeline |
| Southern Cross Media |
| Australian Critical |
Southern Cross and Australian Critical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Cross and Australian Critical
The main advantage of trading using opposite Southern Cross and Australian Critical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Cross position performs unexpectedly, Australian Critical 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 Australian Critical will offset losses from the drop in Australian Critical's long position.| Southern Cross vs. Embark Education Group | Southern Cross vs. Centrex Metals | Southern Cross vs. Stelar Metals | Southern Cross vs. Centuria Industrial Reit |
| Australian Critical vs. Aristocrat Leisure | Australian Critical vs. Argo Investments | Australian Critical vs. Auctus Alternative Investments | Australian Critical vs. Pure Foods Tasmania |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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