Correlation Between REDFLEX HOLDINGS and Altura Mining
Can any of the company-specific risk be diversified away by investing in both REDFLEX HOLDINGS and Altura Mining 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 REDFLEX HOLDINGS and Altura Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REDFLEX HOLDINGS LTD and Altura Mining Limited, you can compare the effects of market volatilities on REDFLEX HOLDINGS and Altura Mining 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 REDFLEX HOLDINGS with a short position of Altura Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of REDFLEX HOLDINGS and Altura Mining.
Diversification Opportunities for REDFLEX HOLDINGS and Altura Mining
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between REDFLEX and Altura is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding REDFLEX HOLDINGS LTD and Altura Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altura Mining Limited and REDFLEX 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 REDFLEX HOLDINGS LTD are associated (or correlated) with Altura Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altura Mining Limited has no effect on the direction of REDFLEX HOLDINGS i.e., REDFLEX HOLDINGS and Altura Mining go up and down completely randomly.
Pair Corralation between REDFLEX HOLDINGS and Altura Mining
Assuming the 90 days horizon REDFLEX HOLDINGS is expected to generate 1.98 times less return on investment than Altura Mining. But when comparing it to its historical volatility, REDFLEX HOLDINGS LTD is 1.57 times less risky than Altura Mining. It trades about 0.14 of its potential returns per unit of risk. Altura Mining Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 0.57 in Altura Mining Limited on December 29, 2024 and sell it today you would earn a total of 1.33 from holding Altura Mining Limited or generate 233.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.31% |
Values | Daily Returns |
REDFLEX HOLDINGS LTD vs. Altura Mining Limited
Performance |
Timeline |
REDFLEX HOLDINGS LTD |
Altura Mining Limited |
REDFLEX HOLDINGS and Altura Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with REDFLEX HOLDINGS and Altura Mining
The main advantage of trading using opposite REDFLEX HOLDINGS and Altura Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REDFLEX HOLDINGS position performs unexpectedly, Altura Mining 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 Altura Mining will offset losses from the drop in Altura Mining's long position.REDFLEX HOLDINGS vs. BioNTech SE | REDFLEX HOLDINGS vs. Dyadic International | REDFLEX HOLDINGS vs. Genfit | REDFLEX HOLDINGS vs. Old Republic International |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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