Correlation Between Southcorp Capital and Pardee Resources

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

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

Diversification Opportunities for Southcorp Capital and Pardee Resources

-0.38

Correlation Coefficient

Southcorp Capital  Pardee Resources

Very good diversification

The 3 months correlation between Southcorp and Pardee is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Southcorp Capital and Pardee Resources Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pardee Resources 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 Pardee Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pardee Resources has no effect on the direction of Southcorp Capital i.e., Southcorp Capital and Pardee Resources go up and down completely randomly.

Pair Corralation between Southcorp Capital and Pardee Resources

Given the investment horizon of 90 days Southcorp Capital is expected to generate 241.27 times more return on investment than Pardee Resources. However, Southcorp Capital is 241.27 times more volatile than Pardee Resources Co. It trades about 0.35 of its potential returns per unit of risk. Pardee Resources Co is currently generating about 0.12 per unit of risk. If you would invest  0.30  in Southcorp Capital on October 9, 2024 and sell it today you would lose (0.28) from holding Southcorp Capital or give up 93.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Southcorp Capital  vs.  Pardee Resources Co

Southcorp Capital

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Southcorp Capital are ranked lower than 23 (%) 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.

Pardee Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pardee Resources Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Pardee Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southcorp Capital and Pardee Resources

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

The idea behind Southcorp Capital and Pardee Resources 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.