Correlation Between Southern Cross and Mount Gibson
Can any of the company-specific risk be diversified away by investing in both Southern Cross and Mount Gibson 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 Mount Gibson 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 Mount Gibson Iron, you can compare the effects of market volatilities on Southern Cross and Mount Gibson 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 Mount Gibson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and Mount Gibson.
Diversification Opportunities for Southern Cross and Mount Gibson
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Southern and Mount is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Media and Mount Gibson Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mount Gibson Iron 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 Mount Gibson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mount Gibson Iron has no effect on the direction of Southern Cross i.e., Southern Cross and Mount Gibson go up and down completely randomly.
Pair Corralation between Southern Cross and Mount Gibson
Assuming the 90 days trading horizon Southern Cross Media is expected to under-perform the Mount Gibson. But the stock apears to be less risky and, when comparing its historical volatility, Southern Cross Media is 1.07 times less risky than Mount Gibson. The stock trades about -0.03 of its potential returns per unit of risk. The Mount Gibson Iron is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Mount Gibson Iron on November 3, 2024 and sell it today you would earn a total of 2.00 from holding Mount Gibson Iron or generate 6.67% 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. Mount Gibson Iron
Performance |
| Timeline |
| Southern Cross Media |
| Mount Gibson Iron |
Southern Cross and Mount Gibson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Cross and Mount Gibson
The main advantage of trading using opposite Southern Cross and Mount Gibson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Cross position performs unexpectedly, Mount Gibson 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 Mount Gibson will offset losses from the drop in Mount Gibson'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 |
| Mount Gibson vs. MFF Capital Investments | Mount Gibson vs. Australian Unity Office | Mount Gibson vs. Queste Communications | Mount Gibson vs. Hudson Investment 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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