Correlation Between Red Hill and Mirrabooka Investments

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

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

Diversification Opportunities for Red Hill and Mirrabooka Investments

0.1

Correlation Coefficient

Red Hill  Mirrabooka Investments

Average diversification

The 3 months correlation between Red and Mirrabooka is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Red Hill Iron and Mirrabooka Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirrabooka Investments and Red Hill 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 Hill Iron are associated (or correlated) with Mirrabooka Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirrabooka Investments has no effect on the direction of Red Hill i.e., Red Hill and Mirrabooka Investments go up and down completely randomly.

Pair Corralation between Red Hill and Mirrabooka Investments

Assuming the 90 days trading horizon Red Hill Iron is expected to generate 2.44 times more return on investment than Mirrabooka Investments. However, Red Hill is 2.44 times more volatile than Mirrabooka Investments. It trades about 0.09 of its potential returns per unit of risk. Mirrabooka Investments is currently generating about 0.07 per unit of risk. If you would invest  368.00  in Red Hill Iron on October 27, 2024 and sell it today you would earn a total of  37.00  from holding Red Hill Iron or generate 10.05% return on investment over 90 days.

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

Red Hill Iron  vs.  Mirrabooka Investments

Red Hill Iron

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Red Hill Iron are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Red Hill may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mirrabooka Investments

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mirrabooka Investments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mirrabooka Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Red Hill and Mirrabooka Investments

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

The idea behind Red Hill Iron and Mirrabooka Investments 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.