Correlation Between Southern Cross and Globe Metals

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

Diversification Opportunities for Southern Cross and Globe Metals

0.17

Correlation Coefficient

Southern Cross  Globe Metals

Average diversification

The 3 months correlation between Southern and Globe is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Media and Globe Metals Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Metals 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 Media are associated (or correlated) with Globe Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Metals Mining has no effect on the direction of Southern Cross i.e., Southern Cross and Globe Metals go up and down completely randomly.

Pair Corralation between Southern Cross and Globe Metals

Assuming the 90 days trading horizon Southern Cross Media is expected to under-perform the Globe Metals. But the stock apears to be less risky and, when comparing its historical volatility, Southern Cross Media is 2.04 times less risky than Globe Metals. The stock trades about -0.03 of its potential returns per unit of risk. The Globe Metals Mining is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6.78  in Globe Metals Mining on October 11, 2024 and sell it today you would lose (2.98) from holding Globe Metals Mining or give up 43.95% of portfolio value over 90 days.

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

Southern Cross Media  vs.  Globe Metals Mining

Southern Cross Media

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Cross Media are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Southern Cross unveiled solid returns over the last few months and may actually be approaching a breakup point.

Globe Metals Mining

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Metals Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Globe Metals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Southern Cross and Globe Metals

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

The idea behind Southern Cross Media and Globe Metals Mining 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.

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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.