Correlation Between Red Cat and MicroCloud Hologram

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

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

Diversification Opportunities for Red Cat and MicroCloud Hologram

0.6

Correlation Coefficient

Red Cat  MicroCloud Hologram

Poor diversification

The 3 months correlation between Red and MicroCloud is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and MicroCloud Hologram in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroCloud Hologram and Red Cat 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 Red Cat Holdings are associated (or correlated) with MicroCloud Hologram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroCloud Hologram has no effect on the direction of Red Cat i.e., Red Cat and MicroCloud Hologram go up and down completely randomly.

Pair Corralation between Red Cat and MicroCloud Hologram

Given the investment horizon of 90 days Red Cat Holdings is expected to generate 0.71 times more return on investment than MicroCloud Hologram. However, Red Cat Holdings is 1.42 times less risky than MicroCloud Hologram. It trades about -0.3 of its potential returns per unit of risk. MicroCloud Hologram is currently generating about -0.29 per unit of risk. If you would invest  1,419  in Red Cat Holdings on December 5, 2024 and sell it today you would lose (877.00) from holding Red Cat Holdings or give up 61.8% of portfolio value over 90 days.

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

Red Cat Holdings  vs.  MicroCloud Hologram

Red Cat Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Cat Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

MicroCloud Hologram

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MicroCloud Hologram are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, MicroCloud Hologram displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Red Cat and MicroCloud Hologram

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

The idea behind Red Cat Holdings and MicroCloud Hologram 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.