Correlation Between Perpetual Credit and Southern Cross

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Can any of the company-specific risk be diversified away by investing in both Perpetual Credit and Southern Cross 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 Perpetual Credit and Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perpetual Credit Income and Southern Cross Gold, you can compare the effects of market volatilities on Perpetual Credit and Southern Cross 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 Perpetual Credit with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perpetual Credit and Southern Cross.

Diversification Opportunities for Perpetual Credit and Southern Cross

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Perpetual and Southern is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Perpetual Credit Income and Southern Cross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Gold and Perpetual Credit 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 Perpetual Credit Income are associated (or correlated) with Southern Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Cross Gold has no effect on the direction of Perpetual Credit i.e., Perpetual Credit and Southern Cross go up and down completely randomly.

Pair Corralation between Perpetual Credit and Southern Cross

Assuming the 90 days trading horizon Perpetual Credit is expected to generate 13.01 times less return on investment than Southern Cross. But when comparing it to its historical volatility, Perpetual Credit Income is 5.49 times less risky than Southern Cross. It trades about 0.07 of its potential returns per unit of risk. Southern Cross Gold is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  275.00  in Southern Cross Gold on September 14, 2024 and sell it today you would earn a total of  141.00  from holding Southern Cross Gold or generate 51.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Perpetual Credit Income  vs.  Southern Cross Gold

 Performance 
       Timeline  
Perpetual Credit Income 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Perpetual Credit Income are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Perpetual Credit is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Southern Cross Gold 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Southern Cross Gold are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Southern Cross unveiled solid returns over the last few months and may actually be approaching a breakup point.

Perpetual Credit and Southern Cross Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Perpetual Credit and Southern Cross

The main advantage of trading using opposite Perpetual Credit and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perpetual Credit position performs unexpectedly, Southern Cross 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 Southern Cross will offset losses from the drop in Southern Cross' long position.
The idea behind Perpetual Credit Income and Southern Cross Gold 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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