Correlation Between REDFLEX HOLDINGS and Mason Graphite

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

Diversification Opportunities for REDFLEX HOLDINGS and Mason Graphite

0.4

Correlation Coefficient

REDFLEX HOLDINGS  Mason Graphite

Very weak diversification

The 3 months correlation between REDFLEX and Mason is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding REDFLEX HOLDINGS LTD and Mason Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mason Graphite 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 Mason Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mason Graphite has no effect on the direction of REDFLEX HOLDINGS i.e., REDFLEX HOLDINGS and Mason Graphite go up and down completely randomly.

Pair Corralation between REDFLEX HOLDINGS and Mason Graphite

Assuming the 90 days horizon REDFLEX HOLDINGS LTD is expected to generate 2.99 times more return on investment than Mason Graphite. However, REDFLEX HOLDINGS is 2.99 times more volatile than Mason Graphite. It trades about 0.1 of its potential returns per unit of risk. Mason Graphite is currently generating about -0.12 per unit of risk. If you would invest  2.50  in REDFLEX HOLDINGS LTD on September 5, 2024 and sell it today you would earn a total of  0.26  from holding REDFLEX HOLDINGS LTD or generate 10.4% return on investment over 90 days.

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

REDFLEX HOLDINGS LTD  vs.  Mason Graphite

REDFLEX HOLDINGS LTD

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in REDFLEX HOLDINGS LTD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, REDFLEX HOLDINGS reported solid returns over the last few months and may actually be approaching a breakup point.

Mason Graphite

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mason Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with REDFLEX HOLDINGS and Mason Graphite

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

The idea behind REDFLEX HOLDINGS LTD and Mason Graphite 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.