Correlation Between High Performance and SOUTHERN

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Can any of the company-specific risk be diversified away by investing in both High Performance and SOUTHERN 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 High Performance and SOUTHERN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Performance Beverages and SOUTHERN CALIFORNIA EDISON, you can compare the effects of market volatilities on High Performance and SOUTHERN 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 High Performance with a short position of SOUTHERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Performance and SOUTHERN.

Diversification Opportunities for High Performance and SOUTHERN

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between High and SOUTHERN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding High Performance Beverages and SOUTHERN CALIFORNIA EDISON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN CALIFORNIA and High Performance 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 High Performance Beverages are associated (or correlated) with SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN CALIFORNIA has no effect on the direction of High Performance i.e., High Performance and SOUTHERN go up and down completely randomly.

Pair Corralation between High Performance and SOUTHERN

If you would invest  7,490  in SOUTHERN CALIFORNIA EDISON on September 5, 2024 and sell it today you would earn a total of  150.00  from holding SOUTHERN CALIFORNIA EDISON or generate 2.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

High Performance Beverages  vs.  SOUTHERN CALIFORNIA EDISON

 Performance 
       Timeline  
High Performance Bev 

Risk-Adjusted Performance

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Over the last 90 days High Performance Beverages has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, High Performance is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
SOUTHERN CALIFORNIA 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days SOUTHERN CALIFORNIA EDISON has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SOUTHERN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

High Performance and SOUTHERN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with High Performance and SOUTHERN

The main advantage of trading using opposite High Performance and SOUTHERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Performance position performs unexpectedly, SOUTHERN 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 SOUTHERN will offset losses from the drop in SOUTHERN's long position.
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The idea behind High Performance Beverages and SOUTHERN CALIFORNIA EDISON pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Correlations module to find global opportunities by holding instruments from different markets.

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