Correlation Between PGE and Southern

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

By analyzing existing cross correlation between PGE Corporation and The Southern, you can compare the effects of market volatilities on PGE and Southern 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 PGE with a short position of Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGE and Southern.

Diversification Opportunities for PGE and Southern

0.28

Correlation Coefficient

PGE  Southern

Modest diversification

The 3 months correlation between PGE and Southern is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding PGE Corp. and The Southern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern and PGE 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 PGE Corporation are associated (or correlated) with Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of PGE i.e., PGE and Southern go up and down completely randomly.

Pair Corralation between PGE and Southern

Assuming the 90 days horizon PGE Corporation is expected to under-perform the Southern. In addition to that, PGE is 1.93 times more volatile than The Southern. It trades about -0.24 of its total potential returns per unit of risk. The Southern is currently generating about 0.0 per unit of volatility. If you would invest  8,020  in The Southern on April 23, 2025 and sell it today you would lose (11.00) from holding The Southern or give up 0.14% of portfolio value over 90 days.

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

PGE Corp.  vs.  The Southern

PGE Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days PGE Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Southern

Risk-Adjusted Performance

Insignificant

Over the last 90 days The Southern has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Southern is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PGE and Southern

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

The idea behind PGE Corporation and The Southern 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.