Correlation Between Southern and PGE

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

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

Diversification Opportunities for Southern and PGE

0.28

Correlation Coefficient

Southern  PGE

Modest diversification

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

Pair Corralation between Southern and PGE

Assuming the 90 days horizon The Southern is expected to generate 0.52 times more return on investment than PGE. However, The Southern is 1.93 times less risky than PGE. It trades about 0.0 of its potential returns per unit of risk. PGE Corporation is currently generating about -0.24 per unit of risk. 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

The Southern  vs.  PGE Corp.

Southern

Risk-Adjusted Performance

Very Weak

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.

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 unsteady 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.

Pair Trading with Southern and PGE

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

The idea behind The Southern and PGE Corporation 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.