Correlation Between REDFLEX HOLDINGS and Benton Resources

Can any of the company-specific risk be diversified away by investing in both REDFLEX HOLDINGS and Benton 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 REDFLEX HOLDINGS and Benton Resources 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 Benton Resources, you can compare the effects of market volatilities on REDFLEX HOLDINGS and Benton 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 REDFLEX HOLDINGS with a short position of Benton Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of REDFLEX HOLDINGS and Benton Resources.

Diversification Opportunities for REDFLEX HOLDINGS and Benton Resources

0.13

Correlation Coefficient

REDFLEX HOLDINGS  Benton Resources

Average diversification

The 3 months correlation between REDFLEX and Benton is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding REDFLEX HOLDINGS LTD and Benton Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benton Resources 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 Benton Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benton Resources has no effect on the direction of REDFLEX HOLDINGS i.e., REDFLEX HOLDINGS and Benton Resources go up and down completely randomly.

Pair Corralation between REDFLEX HOLDINGS and Benton Resources

Assuming the 90 days horizon REDFLEX HOLDINGS is expected to generate 4.99 times less return on investment than Benton Resources. But when comparing it to its historical volatility, REDFLEX HOLDINGS LTD is 1.5 times less risky than Benton Resources. It trades about 0.03 of its potential returns per unit of risk. Benton Resources is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Benton Resources on October 7, 2024 and sell it today you would lose (4.18) from holding Benton Resources or give up 46.44% of portfolio value over 90 days.

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

REDFLEX HOLDINGS LTD  vs.  Benton Resources

REDFLEX HOLDINGS LTD

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in REDFLEX HOLDINGS LTD are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, REDFLEX HOLDINGS reported solid returns over the last few months and may actually be approaching a breakup point.

Benton Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Benton Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Benton Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with REDFLEX HOLDINGS and Benton Resources

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

The idea behind REDFLEX HOLDINGS LTD and Benton Resources 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.