Correlation Between I3 Energy and Southern Cross

Can any of the company-specific risk be diversified away by investing in both I3 Energy 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 I3 Energy and Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between I3 Energy Plc and Southern Cross Media, you can compare the effects of market volatilities on I3 Energy 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 I3 Energy with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of I3 Energy and Southern Cross.

Diversification Opportunities for I3 Energy and Southern Cross

-0.32

Correlation Coefficient

I3 Energy  Southern Cross

Very good diversification

The 3 months correlation between ITEEF and Southern is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding I3 Energy Plc and Southern Cross Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Media and I3 Energy 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 I3 Energy Plc 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 Media has no effect on the direction of I3 Energy i.e., I3 Energy and Southern Cross go up and down completely randomly.

Pair Corralation between I3 Energy and Southern Cross

Assuming the 90 days horizon I3 Energy Plc is expected to under-perform the Southern Cross. But the pink sheet apears to be less risky and, when comparing its historical volatility, I3 Energy Plc is 2.56 times less risky than Southern Cross. The pink sheet trades about -0.23 of its potential returns per unit of risk. The Southern Cross Media is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Southern Cross Media on October 10, 2024 and sell it today you would lose (1.27) from holding Southern Cross Media or give up 11.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	29.03%
Values	Daily Returns

I3 Energy Plc  vs.  Southern Cross Media

I3 Energy Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days I3 Energy Plc 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Southern Cross Media

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Cross Media are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Southern Cross may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with I3 Energy and Southern Cross

The main advantage of trading using opposite I3 Energy and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I3 Energy 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.

The idea behind I3 Energy Plc and Southern Cross Media 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.