Correlation Between Red Moon and Neo Battery

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

Diversification Opportunities for Red Moon and Neo Battery

-0.75

Correlation Coefficient

Red Moon  Neo Battery

Pay attention - limited upside

The 3 months correlation between Red and Neo is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Red Moon Resources and Neo Battery Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Battery Materials 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 Neo Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Battery Materials has no effect on the direction of Red Moon i.e., Red Moon and Neo Battery go up and down completely randomly.

Pair Corralation between Red Moon and Neo Battery

Assuming the 90 days horizon Red Moon Resources is expected to under-perform the Neo Battery. But the otc stock apears to be less risky and, when comparing its historical volatility, Red Moon Resources is 12.58 times less risky than Neo Battery. The otc stock trades about -0.05 of its potential returns per unit of risk. The Neo Battery Materials is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  9.50  in Neo Battery Materials on September 5, 2024 and sell it today you would earn a total of  45.50  from holding Neo Battery Materials or generate 478.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Red Moon Resources  vs.  Neo Battery Materials

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Neo Battery Materials

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neo Battery Materials are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Neo Battery reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Red Moon and Neo Battery

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

The idea behind Red Moon Resources and Neo Battery Materials 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.