Correlation Between Super Retail and Red Hill
Can any of the company-specific risk be diversified away by investing in both Super Retail and Red Hill 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 Super Retail and Red Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Super Retail Group and Red Hill Iron, you can compare the effects of market volatilities on Super Retail and Red Hill 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 Super Retail with a short position of Red Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Retail and Red Hill.
Diversification Opportunities for Super Retail and Red Hill
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Super and Red is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail Group and Red Hill Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Hill Iron and Super Retail 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 Super Retail Group are associated (or correlated) with Red Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Hill Iron has no effect on the direction of Super Retail i.e., Super Retail and Red Hill go up and down completely randomly.
Pair Corralation between Super Retail and Red Hill
Assuming the 90 days trading horizon Super Retail Group is expected to generate 1.26 times more return on investment than Red Hill. However, Super Retail is 1.26 times more volatile than Red Hill Iron. It trades about -0.01 of its potential returns per unit of risk. Red Hill Iron is currently generating about -0.13 per unit of risk. If you would invest 1,469 in Super Retail Group on December 2, 2024 and sell it today you would lose (41.00) from holding Super Retail Group or give up 2.79% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Super Retail Group vs. Red Hill Iron
Performance |
Timeline |
Super Retail Group |
Red Hill Iron |
Super Retail and Red Hill Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Super Retail and Red Hill
The main advantage of trading using opposite Super Retail and Red Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Retail position performs unexpectedly, Red Hill 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 Red Hill will offset losses from the drop in Red Hill's long position.Super Retail vs. Catalyst Metals | Super Retail vs. Tambourah Metals | Super Retail vs. Hotel Property Investments | Super Retail vs. Dexus Convenience Retail |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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