Correlation Between Southern Company and Current Water

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

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

Diversification Opportunities for Southern Company and Current Water

-0.67

Correlation Coefficient

Southern Company  Current Water

Excellent diversification

The 3 months correlation between Southern and Current is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Southern Company Series and Current Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Current Water Techno and Southern Company 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 Company Series are associated (or correlated) with Current Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Current Water Techno has no effect on the direction of Southern Company i.e., Southern Company and Current Water go up and down completely randomly.

Pair Corralation between Southern Company and Current Water

Given the investment horizon of 90 days Southern Company Series is expected to under-perform the Current Water. But the stock apears to be less risky and, when comparing its historical volatility, Southern Company Series is 11.03 times less risky than Current Water. The stock trades about -0.15 of its potential returns per unit of risk. The Current Water Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.58  in Current Water Technologies on September 9, 2025 and sell it today you would earn a total of  0.35  from holding Current Water Technologies or generate 60.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Southern Company Series  vs.  Current Water Technologies

Southern Company

Risk-Adjusted Performance

Weakest

Over the last 90 days Southern Company Series has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking indicators, Southern Company is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Current Water Techno

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Current Water Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Current Water reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southern Company and Current Water

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

The idea behind Southern Company Series and Current Water Technologies 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.