Correlation Between Boswell J and Southcorp Capital

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

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

Diversification Opportunities for Boswell J and Southcorp Capital

0.28

Correlation Coefficient

Boswell J  Southcorp Capital

Modest diversification

The 3 months correlation between Boswell and Southcorp is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Boswell J G and Southcorp Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southcorp Capital and Boswell J 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 Boswell J G 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 Boswell J i.e., Boswell J and Southcorp Capital go up and down completely randomly.

Pair Corralation between Boswell J and Southcorp Capital

Given the investment horizon of 90 days Boswell J is expected to generate 12963.51 times less return on investment than Southcorp Capital. But when comparing it to its historical volatility, Boswell J G is 250.9 times less risky than Southcorp Capital. It trades about 0.01 of its potential returns per unit of risk. Southcorp Capital is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1.40  in Southcorp Capital on October 26, 2024 and sell it today you would lose (1.10) from holding Southcorp Capital or give up 78.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

Boswell J G  vs.  Southcorp Capital

Boswell J G

Risk-Adjusted Performance

0 of 100

Very Weak

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

Southcorp Capital

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Southcorp Capital are ranked lower than 24 (%) 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 Boswell J and Southcorp Capital

The main advantage of trading using opposite Boswell J and Southcorp Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boswell J 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 Boswell J G 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.