Correlation Between Propel Holdings and Redishred Capital

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

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

Diversification Opportunities for Propel Holdings and Redishred Capital

0.86

Correlation Coefficient

Propel Holdings  Redishred Capital

Very poor diversification

The 3 months correlation between Propel and Redishred is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Propel Holdings and Redishred Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redishred Capital Corp and Propel 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 Propel Holdings are associated (or correlated) with Redishred Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redishred Capital Corp has no effect on the direction of Propel Holdings i.e., Propel Holdings and Redishred Capital go up and down completely randomly.

Pair Corralation between Propel Holdings and Redishred Capital

Assuming the 90 days trading horizon Propel Holdings is expected to generate 1.65 times less return on investment than Redishred Capital. But when comparing it to its historical volatility, Propel Holdings is 1.04 times less risky than Redishred Capital. It trades about 0.14 of its potential returns per unit of risk. Redishred Capital Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  312.00  in Redishred Capital Corp on September 12, 2024 and sell it today you would earn a total of  175.00  from holding Redishred Capital Corp or generate 56.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Propel Holdings  vs.  Redishred Capital Corp

Propel Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Propel Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Propel Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Redishred Capital Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Redishred Capital Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Redishred Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Propel Holdings and Redishred Capital

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

The idea behind Propel Holdings and Redishred Capital Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.