Correlation Between Red Pine and Honey Badger

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

By analyzing existing cross correlation between Red Pine Exploration and Honey Badger Silver, you can compare the effects of market volatilities on Red Pine and Honey Badger 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 Pine with a short position of Honey Badger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and Honey Badger.

Diversification Opportunities for Red Pine and Honey Badger

0.15

Correlation Coefficient

Red Pine  Honey Badger

Average diversification

The 3 months correlation between Red and Honey is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and Honey Badger Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honey Badger Silver and Red Pine 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 Pine Exploration are associated (or correlated) with Honey Badger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honey Badger Silver has no effect on the direction of Red Pine i.e., Red Pine and Honey Badger go up and down completely randomly.

Pair Corralation between Red Pine and Honey Badger

Assuming the 90 days horizon Red Pine Exploration is expected to generate 0.55 times more return on investment than Honey Badger. However, Red Pine Exploration is 1.83 times less risky than Honey Badger. It trades about 0.02 of its potential returns per unit of risk. Honey Badger Silver is currently generating about -0.01 per unit of risk. If you would invest  12.00  in Red Pine Exploration on December 4, 2024 and sell it today you would earn a total of  0.00  from holding Red Pine Exploration or generate 0.0% return on investment over 90 days.

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

Red Pine Exploration  vs.  Honey Badger Silver

Red Pine Exploration

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Red Pine Exploration are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Red Pine is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Honey Badger Silver

Risk-Adjusted Performance

Very Weak

Over the last 90 days Honey Badger Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Honey Badger is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Red Pine and Honey Badger

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

The idea behind Red Pine Exploration and Honey Badger Silver 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.