Correlation Between SOUTHERN and BigBearai Holdings

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

By analyzing existing cross correlation between SOUTHERN PER CORP and BigBearai Holdings, you can compare the effects of market volatilities on SOUTHERN and BigBearai Holdings 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 with a short position of BigBearai Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHERN and BigBearai Holdings.

Diversification Opportunities for SOUTHERN and BigBearai Holdings

-0.48

Correlation Coefficient

SOUTHERN  BigBearai Holdings

Very good diversification

The 3 months correlation between SOUTHERN and BigBearai is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHERN PER CORP and BigBearai Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BigBearai Holdings and SOUTHERN 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 PER CORP are associated (or correlated) with BigBearai Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BigBearai Holdings has no effect on the direction of SOUTHERN i.e., SOUTHERN and BigBearai Holdings go up and down completely randomly.

Pair Corralation between SOUTHERN and BigBearai Holdings

Assuming the 90 days trading horizon SOUTHERN is expected to generate 2168.2 times less return on investment than BigBearai Holdings. But when comparing it to its historical volatility, SOUTHERN PER CORP is 16.04 times less risky than BigBearai Holdings. It trades about 0.0 of its potential returns per unit of risk. BigBearai Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  150.00  in BigBearai Holdings on October 20, 2024 and sell it today you would earn a total of  242.00  from holding BigBearai Holdings or generate 161.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.6%
Values	Daily Returns

SOUTHERN PER CORP  vs.  BigBearai Holdings

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOUTHERN PER CORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SOUTHERN is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

BigBearai Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BigBearai Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, BigBearai Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SOUTHERN and BigBearai Holdings

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

The idea behind SOUTHERN PER CORP and BigBearai Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.