Correlation Between Red Hill and Steamships Trading

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

Diversification Opportunities for Red Hill and Steamships Trading

-0.44

Correlation Coefficient

Red Hill  Steamships Trading

Very good diversification

The 3 months correlation between Red and Steamships is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Red Hill Iron and Steamships Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steamships Trading 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 Steamships Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steamships Trading has no effect on the direction of Red Hill i.e., Red Hill and Steamships Trading go up and down completely randomly.

Pair Corralation between Red Hill and Steamships Trading

Assuming the 90 days trading horizon Red Hill Iron is expected to under-perform the Steamships Trading. In addition to that, Red Hill is 6.28 times more volatile than Steamships Trading. It trades about -0.21 of its total potential returns per unit of risk. Steamships Trading is currently generating about 0.03 per unit of volatility. If you would invest  1,380  in Steamships Trading on December 30, 2024 and sell it today you would earn a total of  6.00  from holding Steamships Trading or generate 0.43% return on investment over 90 days.

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

Red Hill Iron  vs.  Steamships Trading

Red Hill Iron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Hill Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Steamships Trading

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Steamships Trading are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Steamships Trading 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 Steamships Trading

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

The idea behind Red Hill Iron and Steamships Trading 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.