Correlation Between Southern Cross and Peel Mining
Can any of the company-specific risk be diversified away by investing in both Southern Cross and Peel Mining 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 Peel Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Cross Gold and Peel Mining, you can compare the effects of market volatilities on Southern Cross and Peel Mining 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 Peel Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and Peel Mining.
Diversification Opportunities for Southern Cross and Peel Mining
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Southern and Peel is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Gold and Peel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel Mining 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 Gold are associated (or correlated) with Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining has no effect on the direction of Southern Cross i.e., Southern Cross and Peel Mining go up and down completely randomly.
Pair Corralation between Southern Cross and Peel Mining
Assuming the 90 days trading horizon Southern Cross Gold is expected to generate 1.45 times more return on investment than Peel Mining. However, Southern Cross is 1.45 times more volatile than Peel Mining. It trades about 0.05 of its potential returns per unit of risk. Peel Mining is currently generating about -0.03 per unit of risk. If you would invest 327.00 in Southern Cross Gold on September 23, 2024 and sell it today you would earn a total of 18.00 from holding Southern Cross Gold or generate 5.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Southern Cross Gold vs. Peel Mining
Performance |
Timeline |
Southern Cross Gold |
Peel Mining |
Southern Cross and Peel Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Southern Cross and Peel Mining
The main advantage of trading using opposite Southern Cross and Peel Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Cross position performs unexpectedly, Peel Mining 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 Peel Mining will offset losses from the drop in Peel Mining's long position.Southern Cross vs. Northern Star Resources | Southern Cross vs. Evolution Mining | Southern Cross vs. Bluescope Steel | Southern Cross vs. Aneka Tambang Tbk |
Peel Mining vs. Northern Star Resources | Peel Mining vs. Evolution Mining | Peel Mining vs. Bluescope Steel | Peel Mining 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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