Correlation Between Truscott Mining and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Truscott 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 Truscott 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 Truscott Mining Corp and Southern Cross Gold, you can compare the effects of market volatilities on Truscott 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 Truscott Mining with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truscott Mining and Southern Cross.
Diversification Opportunities for Truscott Mining and Southern Cross
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Truscott and Southern is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Truscott Mining Corp and Southern Cross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Gold and Truscott 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 Truscott Mining Corp 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 Gold has no effect on the direction of Truscott Mining i.e., Truscott Mining and Southern Cross go up and down completely randomly.
Pair Corralation between Truscott Mining and Southern Cross
Assuming the 90 days trading horizon Truscott Mining Corp is expected to generate 0.5 times more return on investment than Southern Cross. However, Truscott Mining Corp is 1.99 times less risky than Southern Cross. It trades about 0.19 of its potential returns per unit of risk. Southern Cross Gold is currently generating about -0.05 per unit of risk. If you would invest 7.80 in Truscott Mining Corp on October 23, 2024 and sell it today you would earn a total of 0.40 from holding Truscott Mining Corp or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Truscott Mining Corp vs. Southern Cross Gold
Performance |
| Timeline |
| Truscott Mining Corp |
| Southern Cross Gold |
Truscott Mining and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truscott Mining and Southern Cross
The main advantage of trading using opposite Truscott Mining and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truscott 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.| Truscott Mining vs. Land Homes Group | Truscott Mining vs. Tombador Iron | Truscott Mining vs. Farm Pride Foods | Truscott Mining vs. Australian Unity Office |
| Southern Cross vs. Northern Star Resources | Southern Cross vs. Evolution Mining | Southern Cross vs. Bluescope Steel | Southern Cross vs. De Grey Mining |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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