Correlation Between Adler Group and Southcorp Capital

Can any of the company-specific risk be diversified away by investing in both Adler Group and Southcorp Capital 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 Adler Group and Southcorp Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Adler Group SA and Southcorp Capital, you can compare the effects of market volatilities on Adler Group and Southcorp Capital 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 Adler Group with a short position of Southcorp Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adler Group and Southcorp Capital.

Diversification Opportunities for Adler Group and Southcorp Capital

-0.48

Correlation Coefficient

Adler Group  Southcorp Capital

Very good diversification

The 3 months correlation between Adler and Southcorp is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Adler Group SA and Southcorp Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southcorp Capital and Adler Group 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 Adler Group SA are associated (or correlated) with Southcorp Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southcorp Capital has no effect on the direction of Adler Group i.e., Adler Group and Southcorp Capital go up and down completely randomly.

Pair Corralation between Adler Group and Southcorp Capital

If you would invest  0.50  in Southcorp Capital on December 2, 2024 and sell it today you would lose (0.49) from holding Southcorp Capital or give up 98.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	69.23%
Values	Daily Returns

Adler Group SA  vs.  Southcorp Capital

Adler Group SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adler Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adler Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Southcorp Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Southcorp Capital are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, Southcorp Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adler Group and Southcorp Capital

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

The idea behind Adler Group SA and Southcorp Capital 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.