Correlation Between Southern Cross and Australian Unity
Can any of the company-specific risk be diversified away by investing in both Southern Cross and Australian Unity 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 Unity 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 Unity Ltd, you can compare the effects of market volatilities on Southern Cross and Australian Unity 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 Unity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and Australian Unity.
Diversification Opportunities for Southern Cross and Australian Unity
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Southern and Australian is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Media and Australian Unity Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity 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 Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity has no effect on the direction of Southern Cross i.e., Southern Cross and Australian Unity go up and down completely randomly.
Pair Corralation between Southern Cross and Australian Unity
Assuming the 90 days trading horizon Southern Cross Media is expected to under-perform the Australian Unity. In addition to that, Southern Cross is 3.49 times more volatile than Australian Unity Ltd. It trades about -0.03 of its total potential returns per unit of risk. Australian Unity Ltd is currently generating about 0.01 per unit of volatility. If you would invest 8,043 in Australian Unity Ltd on October 23, 2024 and sell it today you would earn a total of 152.00 from holding Australian Unity Ltd or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Cross Media vs. Australian Unity Ltd
Performance |
| Timeline |
| Southern Cross Media |
| Australian Unity |
Southern Cross and Australian Unity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Cross and Australian Unity
The main advantage of trading using opposite Southern Cross and Australian Unity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Cross position performs unexpectedly, Australian Unity 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 Unity will offset losses from the drop in Australian Unity's long position.| Southern Cross vs. Retail Food Group | Southern Cross vs. Bailador Technology Invest | Southern Cross vs. Pinnacle Investment Management | Southern Cross vs. Ambertech |
| Australian Unity vs. Autosports Group | Australian Unity vs. Infomedia | Australian Unity vs. Black Rock Mining | Australian Unity vs. Kneomedia |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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