Correlation Between Southern ITS and New Generation

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

By analyzing existing cross correlation between Southern ITS International and New Generation Consumer, you can compare the effects of market volatilities on Southern ITS and New Generation 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 Southern ITS with a short position of New Generation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern ITS and New Generation.

Diversification Opportunities for Southern ITS and New Generation

-0.41

Correlation Coefficient

Southern ITS  New Generation

Very good diversification

The 3 months correlation between Southern and New is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Southern ITS International and New Generation Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Generation Consumer and Southern ITS 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 Southern ITS International are associated (or correlated) with New Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Generation Consumer has no effect on the direction of Southern ITS i.e., Southern ITS and New Generation go up and down completely randomly.

Pair Corralation between Southern ITS and New Generation

Given the investment horizon of 90 days Southern ITS International is expected to generate 0.41 times more return on investment than New Generation. However, Southern ITS International is 2.43 times less risky than New Generation. It trades about 0.08 of its potential returns per unit of risk. New Generation Consumer is currently generating about 0.02 per unit of risk. If you would invest  4.16  in Southern ITS International on December 19, 2024 and sell it today you would earn a total of  0.84  from holding Southern ITS International or generate 20.19% return on investment over 90 days.

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

Southern ITS International  vs.  New Generation Consumer

Southern ITS Interna

Risk-Adjusted Performance

Modest

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

New Generation Consumer

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New Generation Consumer are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, New Generation reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southern ITS and New Generation

The main advantage of trading using opposite Southern ITS and New Generation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern ITS position performs unexpectedly, New Generation 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 New Generation will offset losses from the drop in New Generation's long position.

The idea behind Southern ITS International and New Generation Consumer 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..