Correlation Between Talisman Mining and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Talisman Mining and Southern Cross 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 Talisman Mining and Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talisman Mining and Southern Cross Media, you can compare the effects of market volatilities on Talisman Mining and Southern Cross 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 Talisman Mining with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talisman Mining and Southern Cross.
Diversification Opportunities for Talisman Mining and Southern Cross
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Talisman and Southern is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Talisman Mining and Southern Cross Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Media and Talisman Mining 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 Talisman Mining are associated (or correlated) with Southern Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Cross Media has no effect on the direction of Talisman Mining i.e., Talisman Mining and Southern Cross go up and down completely randomly.
Pair Corralation between Talisman Mining and Southern Cross
Assuming the 90 days trading horizon Talisman Mining is expected to generate 1.36 times more return on investment than Southern Cross. However, Talisman Mining is 1.36 times more volatile than Southern Cross Media. It trades about 0.09 of its potential returns per unit of risk. Southern Cross Media is currently generating about -0.09 per unit of risk. If you would invest 20.00 in Talisman Mining on October 28, 2024 and sell it today you would earn a total of 1.00 from holding Talisman Mining or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talisman Mining vs. Southern Cross Media
Performance |
| Timeline |
| Talisman Mining |
| Southern Cross Media |
Talisman Mining and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talisman Mining and Southern Cross
The main advantage of trading using opposite Talisman Mining and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talisman Mining position performs unexpectedly, Southern Cross 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 Cross will offset losses from the drop in Southern Cross' long position.| Talisman Mining vs. Sequoia Financial Group | Talisman Mining vs. Saferoads Holdings | Talisman Mining vs. Aurelia Metals | Talisman Mining vs. Dalaroo Metals |
| Southern Cross vs. Lendlease Group | Southern Cross vs. Epsilon Healthcare | Southern Cross vs. Oceania Healthcare | Southern Cross vs. Legacy Iron Ore |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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