Correlation Between Southern Cross and Petrus Resources

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

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

Diversification Opportunities for Southern Cross and Petrus Resources

0.26

Correlation Coefficient

Southern Cross  Petrus Resources

Modest diversification

The 3 months correlation between Southern and Petrus is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Media and Petrus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrus Resources and Southern Cross 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 Cross Media are associated (or correlated) with Petrus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrus Resources has no effect on the direction of Southern Cross i.e., Southern Cross and Petrus Resources go up and down completely randomly.

Pair Corralation between Southern Cross and Petrus Resources

Assuming the 90 days horizon Southern Cross Media is expected to under-perform the Petrus Resources. In addition to that, Southern Cross is 1.24 times more volatile than Petrus Resources. It trades about -0.05 of its total potential returns per unit of risk. Petrus Resources is currently generating about -0.01 per unit of volatility. 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

Southern Cross Media  vs.  Petrus Resources

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.

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.

Pair Trading with Southern Cross and Petrus Resources

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

The idea behind Southern Cross Media and Petrus Resources 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..