Correlation Between Red Moon and Calissio Resources

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

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

Diversification Opportunities for Red Moon and Calissio Resources

0.49

Correlation Coefficient

Red Moon  Calissio Resources

Very weak diversification

The 3 months correlation between Red and Calissio is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Red Moon Resources and Calissio Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calissio Resources and Red Moon 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 Moon Resources are associated (or correlated) with Calissio Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calissio Resources has no effect on the direction of Red Moon i.e., Red Moon and Calissio Resources go up and down completely randomly.

Pair Corralation between Red Moon and Calissio Resources

Assuming the 90 days horizon Red Moon is expected to generate 464.25 times less return on investment than Calissio Resources. But when comparing it to its historical volatility, Red Moon Resources is 42.61 times less risky than Calissio Resources. It trades about 0.01 of its potential returns per unit of risk. Calissio Resources Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.07  in Calissio Resources Group on September 15, 2024 and sell it today you would lose (0.03) from holding Calissio Resources Group or give up 42.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Red Moon Resources  vs.  Calissio Resources Group

Red Moon Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Red Moon Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Calissio Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calissio Resources Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Red Moon and Calissio Resources

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

The idea behind Red Moon Resources and Calissio Resources Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.