Correlation Between Southern Cross and Challenger
Can any of the company-specific risk be diversified away by investing in both Southern Cross and Challenger 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 Challenger 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 Challenger, you can compare the effects of market volatilities on Southern Cross and Challenger 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 Challenger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and Challenger.
Diversification Opportunities for Southern Cross and Challenger
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Southern and Challenger is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Media and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger 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 Challenger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Challenger has no effect on the direction of Southern Cross i.e., Southern Cross and Challenger go up and down completely randomly.
Pair Corralation between Southern Cross and Challenger
Assuming the 90 days trading horizon Southern Cross Media is expected to generate 3.18 times more return on investment than Challenger. However, Southern Cross is 3.18 times more volatile than Challenger. It trades about 0.15 of its potential returns per unit of risk. Challenger is currently generating about -0.06 per unit of risk. If you would invest 57.00 in Southern Cross Media on October 14, 2024 and sell it today you would earn a total of 5.00 from holding Southern Cross Media or generate 8.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Cross Media vs. Challenger
Performance |
| Timeline |
| Southern Cross Media |
| Challenger |
Southern Cross and Challenger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Cross and Challenger
The main advantage of trading using opposite Southern Cross and Challenger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Cross position performs unexpectedly, Challenger 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 Challenger will offset losses from the drop in Challenger's long position.| Southern Cross vs. National Storage REIT | Southern Cross vs. BKI Investment | Southern Cross vs. Aristocrat Leisure | Southern Cross vs. Autosports Group |
| Challenger vs. Charter Hall Retail | Challenger vs. Southern Cross Media | Challenger vs. Qbe Insurance Group | Challenger vs. Maggie Beer Holdings |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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