Correlation Between Pure Foods and Southern Cross

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

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

Diversification Opportunities for Pure Foods and Southern Cross

-0.14

Correlation Coefficient

Pure Foods  Southern Cross

Good diversification

The 3 months correlation between Pure and Southern is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Pure Foods Tasmania and Southern Cross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Gold and Pure Foods 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 Pure Foods Tasmania 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 Gold has no effect on the direction of Pure Foods i.e., Pure Foods and Southern Cross go up and down completely randomly.

Pair Corralation between Pure Foods and Southern Cross

If you would invest  347.00  in Southern Cross Gold on October 10, 2024 and sell it today you would earn a total of  36.00  from holding Southern Cross Gold or generate 10.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pure Foods Tasmania  vs.  Southern Cross Gold

Pure Foods Tasmania

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Foods Tasmania are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pure Foods is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Southern Cross Gold

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Cross Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Southern Cross unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pure Foods and Southern Cross

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

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.