Correlation Between InfuSystems Holdings and REDFLEX HOLDINGS

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

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

Diversification Opportunities for InfuSystems Holdings and REDFLEX HOLDINGS

-0.45

Correlation Coefficient

InfuSystems Holdings  REDFLEX HOLDINGS

Very good diversification

The 3 months correlation between InfuSystems and REDFLEX is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding InfuSystems Holdings 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 InfuSystems Holdings 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 InfuSystems Holdings 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 InfuSystems Holdings i.e., InfuSystems Holdings and REDFLEX HOLDINGS go up and down completely randomly.

Pair Corralation between InfuSystems Holdings and REDFLEX HOLDINGS

Given the investment horizon of 90 days InfuSystems Holdings is expected to under-perform the REDFLEX HOLDINGS. But the stock apears to be less risky and, when comparing its historical volatility, InfuSystems Holdings is 6.96 times less risky than REDFLEX HOLDINGS. The stock trades about -0.22 of its potential returns per unit of risk. The REDFLEX HOLDINGS LTD is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2.16  in REDFLEX HOLDINGS LTD on October 10, 2024 and sell it today you would earn a total of  0.70  from holding REDFLEX HOLDINGS LTD or generate 32.41% return on investment over 90 days.

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

InfuSystems Holdings  vs.  REDFLEX HOLDINGS LTD

InfuSystems Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InfuSystems Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, InfuSystems Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

REDFLEX HOLDINGS LTD

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in REDFLEX HOLDINGS LTD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, REDFLEX HOLDINGS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InfuSystems Holdings and REDFLEX HOLDINGS

The main advantage of trading using opposite InfuSystems Holdings and REDFLEX HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfuSystems Holdings 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 InfuSystems Holdings 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.