Correlation Between Southern Cross and Home Consortium
Can any of the company-specific risk be diversified away by investing in both Southern Cross and Home Consortium 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 Home Consortium 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 Home Consortium, you can compare the effects of market volatilities on Southern Cross and Home Consortium 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 Home Consortium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and Home Consortium.
Diversification Opportunities for Southern Cross and Home Consortium
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southern and Home is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Media and Home Consortium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Consortium 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 Home Consortium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Consortium has no effect on the direction of Southern Cross i.e., Southern Cross and Home Consortium go up and down completely randomly.
Pair Corralation between Southern Cross and Home Consortium
Assuming the 90 days trading horizon Southern Cross Media is expected to generate 1.4 times more return on investment than Home Consortium. However, Southern Cross is 1.4 times more volatile than Home Consortium. It trades about -0.09 of its potential returns per unit of risk. Home Consortium is currently generating about -0.21 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. Home Consortium
Performance |
| Timeline |
| Southern Cross Media |
| Home Consortium |
Southern Cross and Home Consortium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Cross and Home Consortium
The main advantage of trading using opposite Southern Cross and Home Consortium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Cross position performs unexpectedly, Home Consortium 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 Home Consortium will offset losses from the drop in Home Consortium's long position.| Southern Cross vs. Lendlease Group | Southern Cross vs. Epsilon Healthcare | Southern Cross vs. Oceania Healthcare | Southern Cross vs. Legacy Iron Ore |
| Home Consortium vs. Scentre Group | Home Consortium vs. Vicinity Centres Re | Home Consortium vs. Charter Hall Retail | Home Consortium vs. Cromwell Property Group |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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