Correlation Between COG Financial and Red Mountain

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

By analyzing existing cross correlation between COG Financial Services and Red Mountain Mining, you can compare the effects of market volatilities on COG Financial and Red Mountain 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 COG Financial with a short position of Red Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of COG Financial and Red Mountain.

Diversification Opportunities for COG Financial and Red Mountain

0.0

Correlation Coefficient

COG Financial  Red Mountain

Pay attention - limited upside

The 3 months correlation between COG and Red is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding COG Financial Services and Red Mountain Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Mountain Mining and COG Financial 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 COG Financial Services are associated (or correlated) with Red Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Mountain Mining has no effect on the direction of COG Financial i.e., COG Financial and Red Mountain go up and down completely randomly.

Pair Corralation between COG Financial and Red Mountain

If you would invest (100.00) in Red Mountain Mining on October 25, 2024 and sell it today you would earn a total of  100.00  from holding Red Mountain Mining or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

COG Financial Services  vs.  Red Mountain Mining

COG Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COG Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, COG Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Red Mountain Mining

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Red Mountain Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Red Mountain is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with COG Financial and Red Mountain

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

The idea behind COG Financial Services and Red Mountain Mining 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.

Check out your portfolio center.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.