Correlation Between SOUTHERN and Hawkins

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

Diversification Opportunities for SOUTHERN and Hawkins

0.0

Correlation Coefficient

SOUTHERN  Hawkins

Pay attention - limited upside

The 3 months correlation between SOUTHERN and Hawkins is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHERN PER CORP and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of SOUTHERN i.e., SOUTHERN and Hawkins go up and down completely randomly.

Pair Corralation between SOUTHERN and Hawkins

Assuming the 90 days trading horizon SOUTHERN PER CORP is expected to generate 0.49 times more return on investment than Hawkins. However, SOUTHERN PER CORP is 2.04 times less risky than Hawkins. It trades about 0.16 of its potential returns per unit of risk. Hawkins is currently generating about -0.17 per unit of risk. If you would invest  11,455  in SOUTHERN PER CORP on September 24, 2024 and sell it today you would earn a total of  355.00  from holding SOUTHERN PER CORP or generate 3.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	76.19%
Values	Daily Returns

SOUTHERN PER CORP  vs.  Hawkins

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Hawkins

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward-looking signals, Hawkins may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SOUTHERN and Hawkins

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

The idea behind SOUTHERN PER CORP and Hawkins 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.