Correlation Between Keweenaw Land and Southcorp Capital

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

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

Diversification Opportunities for Keweenaw Land and Southcorp Capital

0.57

Correlation Coefficient

Keweenaw Land  Southcorp Capital

Very weak diversification

The 3 months correlation between Keweenaw and Southcorp is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Keweenaw Land Association and Southcorp Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southcorp Capital and Keweenaw Land 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 Keweenaw Land Association 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 Keweenaw Land i.e., Keweenaw Land and Southcorp Capital go up and down completely randomly.

Pair Corralation between Keweenaw Land and Southcorp Capital

Given the investment horizon of 90 days Keweenaw Land Association is expected to under-perform the Southcorp Capital. But the pink sheet apears to be less risky and, when comparing its historical volatility, Keweenaw Land Association is 82.43 times less risky than Southcorp Capital. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Southcorp Capital is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Southcorp Capital on October 11, 2024 and sell it today you would lose (1.48) from holding Southcorp Capital or give up 98.67% of portfolio value over 90 days.

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

Keweenaw Land Association  vs.  Southcorp Capital

Keweenaw Land Association

Risk-Adjusted Performance

0 of 100

Very Weak

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

Southcorp Capital

Risk-Adjusted Performance

21 of 100

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 weak technical indicators, Southcorp Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Keweenaw Land and Southcorp Capital

The main advantage of trading using opposite Keweenaw Land and Southcorp Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keweenaw Land 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 Keweenaw Land Association 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.