Correlation Between Red Cat and Iveda Solutions

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Can any of the company-specific risk be diversified away by investing in both Red Cat and Iveda Solutions 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 Iveda Solutions 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 Iveda Solutions, you can compare the effects of market volatilities on Red Cat and Iveda Solutions 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 Iveda Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Iveda Solutions.

Diversification Opportunities for Red Cat and Iveda Solutions

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Red and Iveda is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Iveda Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iveda Solutions 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 Iveda Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iveda Solutions has no effect on the direction of Red Cat i.e., Red Cat and Iveda Solutions go up and down completely randomly.

Pair Corralation between Red Cat and Iveda Solutions

Given the investment horizon of 90 days Red Cat Holdings is expected to generate 0.84 times more return on investment than Iveda Solutions. However, Red Cat Holdings is 1.19 times less risky than Iveda Solutions. It trades about 0.18 of its potential returns per unit of risk. Iveda Solutions is currently generating about 0.05 per unit of risk. If you would invest  77.00  in Red Cat Holdings on October 6, 2024 and sell it today you would earn a total of  1,243  from holding Red Cat Holdings or generate 1614.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Red Cat Holdings  vs.  Iveda Solutions

 Performance 
       Timeline  
Red Cat Holdings 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Red Cat Holdings are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Red Cat unveiled solid returns over the last few months and may actually be approaching a breakup point.
Iveda Solutions 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Iveda Solutions are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, Iveda Solutions sustained solid returns over the last few months and may actually be approaching a breakup point.

Red Cat and Iveda Solutions Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Red Cat and Iveda Solutions

The main advantage of trading using opposite Red Cat and Iveda Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Iveda Solutions 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 Iveda Solutions will offset losses from the drop in Iveda Solutions' long position.
The idea behind Red Cat Holdings and Iveda Solutions 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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