Correlation Between Petrus Resources and Southern Cross

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

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

Diversification Opportunities for Petrus Resources and Southern Cross

0.26

Correlation Coefficient

Petrus Resources  Southern Cross

Modest diversification

The 3 months correlation between Petrus and Southern is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Petrus Resources 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 Petrus Resources 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 Petrus Resources 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 Petrus Resources i.e., Petrus Resources and Southern Cross go up and down completely randomly.

Pair Corralation between Petrus Resources and Southern Cross

Assuming the 90 days horizon Petrus Resources is expected to generate 0.81 times more return on investment than Southern Cross. However, Petrus Resources is 1.24 times less risky than Southern Cross. It trades about -0.01 of its potential returns per unit of risk. Southern Cross Media is currently generating about -0.05 per unit of risk. If you would invest  162.00  in Petrus Resources on October 7, 2024 and sell it today you would lose (60.00) from holding Petrus Resources or give up 37.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.57%
Values	Daily Returns

Petrus Resources  vs.  Southern Cross Media

Petrus Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petrus Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Petrus Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the 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 Petrus Resources and Southern Cross

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

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.