Correlation Between Flexible Solutions and SOUTHERN

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

By analyzing existing cross correlation between Flexible Solutions International and SOUTHERN PER CORP, you can compare the effects of market volatilities on Flexible Solutions and SOUTHERN 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 Flexible Solutions with a short position of SOUTHERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and SOUTHERN.

Diversification Opportunities for Flexible Solutions and SOUTHERN

-0.53

Correlation Coefficient

Flexible Solutions  SOUTHERN

Excellent diversification

The 3 months correlation between Flexible and SOUTHERN is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and SOUTHERN PER CORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN PER P and Flexible Solutions 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 Flexible Solutions International are associated (or correlated) with SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN PER P has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and SOUTHERN go up and down completely randomly.

Pair Corralation between Flexible Solutions and SOUTHERN

Considering the 90-day investment horizon Flexible Solutions International is expected to generate 5.37 times more return on investment than SOUTHERN. However, Flexible Solutions is 5.37 times more volatile than SOUTHERN PER CORP. It trades about 0.01 of its potential returns per unit of risk. SOUTHERN PER CORP is currently generating about -0.07 per unit of risk. If you would invest  361.00  in Flexible Solutions International on September 25, 2024 and sell it today you would lose (6.00) from holding Flexible Solutions International or give up 1.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Flexible Solutions Internation  vs.  SOUTHERN PER CORP

Flexible Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flexible Solutions International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Flexible Solutions is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOUTHERN PER CORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SOUTHERN is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Flexible Solutions and SOUTHERN

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

The idea behind Flexible Solutions International and SOUTHERN PER CORP 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.