Correlation Between Southern Cross and Brambles

Can any of the company-specific risk be diversified away by investing in both Southern Cross and Brambles 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 Brambles 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 Brambles, you can compare the effects of market volatilities on Southern Cross and Brambles 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 Brambles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and Brambles.

Diversification Opportunities for Southern Cross and Brambles

0.77

Correlation Coefficient

Southern Cross  Brambles

Poor diversification

The 3 months correlation between Southern and Brambles is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Media and Brambles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brambles 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 Brambles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brambles has no effect on the direction of Southern Cross i.e., Southern Cross and Brambles go up and down completely randomly.

Pair Corralation between Southern Cross and Brambles

Assuming the 90 days trading horizon Southern Cross is expected to generate 1.17 times less return on investment than Brambles. In addition to that, Southern Cross is 2.4 times more volatile than Brambles. It trades about 0.04 of its total potential returns per unit of risk. Brambles is currently generating about 0.12 per unit of volatility. If you would invest  1,894  in Brambles on December 24, 2024 and sell it today you would earn a total of  141.00  from holding Brambles or generate 7.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Southern Cross Media  vs.  Brambles

Southern Cross Media

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Cross Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Southern Cross may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Brambles

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brambles are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Brambles may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Southern Cross and Brambles

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

The idea behind Southern Cross Media and Brambles 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 Anywhere module to track or share privately all of your investments from the convenience of any device.