Correlation Between Superior Resources and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Superior 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 Superior 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 Superior Resources and Southern Cross Gold, you can compare the effects of market volatilities on Superior 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 Superior Resources with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Resources and Southern Cross.
Diversification Opportunities for Superior Resources and Southern Cross
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Superior and Southern is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Superior Resources 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 Superior 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 Superior 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 Gold has no effect on the direction of Superior Resources i.e., Superior Resources and Southern Cross go up and down completely randomly.
Pair Corralation between Superior Resources and Southern Cross
Assuming the 90 days trading horizon Superior Resources is expected to generate 9.62 times less return on investment than Southern Cross. In addition to that, Superior Resources is 1.46 times more volatile than Southern Cross Gold. It trades about 0.01 of its total potential returns per unit of risk. Southern Cross Gold is currently generating about 0.08 per unit of volatility. If you would invest 290.00 in Southern Cross Gold on September 23, 2024 and sell it today you would earn a total of 55.00 from holding Southern Cross Gold or generate 18.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Superior Resources vs. Southern Cross Gold
Performance |
Timeline |
Superior Resources |
Southern Cross Gold |
Superior Resources and Southern Cross Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Superior Resources and Southern Cross
The main advantage of trading using opposite Superior Resources and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior 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.Superior Resources vs. Northern Star Resources | Superior Resources vs. Evolution Mining | Superior Resources vs. Bluescope Steel | Superior Resources vs. Aneka Tambang Tbk |
Southern Cross vs. Northern Star Resources | Southern Cross vs. Evolution Mining | Southern Cross vs. Bluescope Steel | Southern Cross vs. Aneka Tambang Tbk |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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