Correlation Between Southern and Southern

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

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

Diversification Opportunities for Southern and Southern

0.96

Correlation Coefficient

Southern  Southern

Almost no diversification

The 3 months correlation between Southern and Southern is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Southern Co and Southern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern and Southern 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 Co are associated (or correlated) with Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of Southern i.e., Southern and Southern go up and down completely randomly.

Pair Corralation between Southern and Southern

Given the investment horizon of 90 days Southern Co is expected to generate 1.16 times more return on investment than Southern. However, Southern is 1.16 times more volatile than Southern Co. It trades about 0.01 of its potential returns per unit of risk. Southern Co is currently generating about 0.0 per unit of risk. If you would invest  2,047  in Southern Co on December 30, 2024 and sell it today you would earn a total of  5.00  from holding Southern Co or generate 0.24% return on investment over 90 days.

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

Southern Co  vs.  Southern Co

Southern

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southern Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking indicators, Southern is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Southern

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southern Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking indicators, Southern is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Southern and Southern

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

The idea behind Southern Co and Southern Co 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.