Correlation Between Southcorp Capital and Asia Pptys

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

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

Diversification Opportunities for Southcorp Capital and Asia Pptys

0.32

Correlation Coefficient

Southcorp Capital  Asia Pptys

Weak diversification

The 3 months correlation between Southcorp and Asia is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Southcorp Capital and Asia Pptys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pptys and Southcorp Capital 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 Southcorp Capital are associated (or correlated) with Asia Pptys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pptys has no effect on the direction of Southcorp Capital i.e., Southcorp Capital and Asia Pptys go up and down completely randomly.

Pair Corralation between Southcorp Capital and Asia Pptys

Given the investment horizon of 90 days Southcorp Capital is expected to generate 5.88 times more return on investment than Asia Pptys. However, Southcorp Capital is 5.88 times more volatile than Asia Pptys. It trades about 0.16 of its potential returns per unit of risk. Asia Pptys is currently generating about 0.11 per unit of risk. If you would invest  0.70  in Southcorp Capital on December 3, 2024 and sell it today you would lose (0.69) from holding Southcorp Capital or give up 98.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Southcorp Capital  vs.  Asia Pptys

Southcorp Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Southcorp Capital are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, Southcorp Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Asia Pptys

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Pptys are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Asia Pptys showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southcorp Capital and Asia Pptys

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

The idea behind Southcorp Capital and Asia Pptys 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.