Correlation Between SG Fleet and Southern Cross

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

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

Diversification Opportunities for SG Fleet and Southern Cross

0.44

Correlation Coefficient

SG Fleet  Southern Cross

Very weak diversification

The 3 months correlation between SGF and Southern is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding SG Fleet Group 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 SG Fleet 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 SG Fleet Group 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 SG Fleet i.e., SG Fleet and Southern Cross go up and down completely randomly.

Pair Corralation between SG Fleet and Southern Cross

Assuming the 90 days trading horizon SG Fleet is expected to generate 4.64 times less return on investment than Southern Cross. But when comparing it to its historical volatility, SG Fleet Group is 2.16 times less risky than Southern Cross. It trades about 0.04 of its potential returns per unit of risk. Southern Cross Gold is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  223.00  in Southern Cross Gold on September 29, 2024 and sell it today you would earn a total of  127.00  from holding Southern Cross Gold or generate 56.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.22%
Values	Daily Returns

SG Fleet Group  vs.  Southern Cross Gold

SG Fleet Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SG Fleet Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, SG Fleet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Southern Cross Gold

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Cross Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Southern Cross may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SG Fleet and Southern Cross

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

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.