Correlation Between Red Rock and Banyan Tree

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

By analyzing existing cross correlation between Red Rock Resorts and Banyan Tree Holdings, you can compare the effects of market volatilities on Red Rock and Banyan Tree 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 Rock with a short position of Banyan Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Rock and Banyan Tree.

Diversification Opportunities for Red Rock and Banyan Tree

0.0

Correlation Coefficient

Red Rock  Banyan Tree

Pay attention - limited upside

The 3 months correlation between Red and Banyan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Red Rock Resorts and Banyan Tree Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banyan Tree Holdings and Red Rock 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 Rock Resorts are associated (or correlated) with Banyan Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banyan Tree Holdings has no effect on the direction of Red Rock i.e., Red Rock and Banyan Tree go up and down completely randomly.

Pair Corralation between Red Rock and Banyan Tree

If you would invest  0.08  in Banyan Tree Holdings on December 4, 2024 and sell it today you would earn a total of  0.00  from holding Banyan Tree Holdings or generate 0.0% return on investment over 90 days.

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

Red Rock Resorts  vs.  Banyan Tree Holdings

Red Rock Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Rock Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Red Rock is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Banyan Tree Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banyan Tree Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Banyan Tree is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Red Rock and Banyan Tree

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

The idea behind Red Rock Resorts and Banyan Tree Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.