Correlation Between Alpha Copper and REDFLEX HOLDINGS

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

By analyzing existing cross correlation between Alpha Copper Corp and REDFLEX HOLDINGS LTD, you can compare the effects of market volatilities on Alpha Copper and REDFLEX HOLDINGS 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 Alpha Copper with a short position of REDFLEX HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Copper and REDFLEX HOLDINGS.

Diversification Opportunities for Alpha Copper and REDFLEX HOLDINGS

0.61

Correlation Coefficient

Alpha Copper  REDFLEX HOLDINGS

Poor diversification

The 3 months correlation between Alpha and REDFLEX is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Copper Corp and REDFLEX HOLDINGS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDFLEX HOLDINGS LTD and Alpha Copper 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 Alpha Copper Corp are associated (or correlated) with REDFLEX HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDFLEX HOLDINGS LTD has no effect on the direction of Alpha Copper i.e., Alpha Copper and REDFLEX HOLDINGS go up and down completely randomly.

Pair Corralation between Alpha Copper and REDFLEX HOLDINGS

Assuming the 90 days horizon Alpha Copper Corp is expected to generate 0.76 times more return on investment than REDFLEX HOLDINGS. However, Alpha Copper Corp is 1.31 times less risky than REDFLEX HOLDINGS. It trades about 0.2 of its potential returns per unit of risk. REDFLEX HOLDINGS LTD is currently generating about 0.14 per unit of risk. If you would invest  9.90  in Alpha Copper Corp on December 29, 2024 and sell it today you would earn a total of  21.10  from holding Alpha Copper Corp or generate 213.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Alpha Copper Corp  vs.  REDFLEX HOLDINGS LTD

Alpha Copper Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Copper Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alpha Copper reported solid returns over the last few months and may actually be approaching a breakup point.

REDFLEX HOLDINGS LTD

Risk-Adjusted Performance

OK

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

Pair Trading with Alpha Copper and REDFLEX HOLDINGS

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

The idea behind Alpha Copper Corp and REDFLEX HOLDINGS LTD 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.