Correlation Between Armada Mercantile and Southern Trust

Can any of the company-specific risk be diversified away by investing in both Armada Mercantile and Southern Trust 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 Armada Mercantile and Southern Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Mercantile and Southern Trust Securities, you can compare the effects of market volatilities on Armada Mercantile and Southern Trust 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 Armada Mercantile with a short position of Southern Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Mercantile and Southern Trust.

Diversification Opportunities for Armada Mercantile and Southern Trust

0.0

Correlation Coefficient

Armada Mercantile  Southern Trust

Pay attention - limited upside

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

Pair Corralation between Armada Mercantile and Southern Trust

If you would invest  0.00  in Southern Trust Securities on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Southern Trust Securities or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Armada Mercantile  vs.  Southern Trust Securities

Armada Mercantile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Mercantile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Southern Trust Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Trust Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Southern Trust is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Armada Mercantile and Southern Trust

The main advantage of trading using opposite Armada Mercantile and Southern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Mercantile position performs unexpectedly, Southern Trust 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 Trust will offset losses from the drop in Southern Trust's long position.

The idea behind Armada Mercantile and Southern Trust Securities 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.