Correlation Between Red Light and BC Craft

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

By analyzing existing cross correlation between Red Light Holland and BC Craft Supply, you can compare the effects of market volatilities on Red Light and BC Craft 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 Light with a short position of BC Craft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Light and BC Craft.

Diversification Opportunities for Red Light and BC Craft

0.0

Correlation Coefficient

Red Light  BC Craft

Pay attention - limited upside

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

Pair Corralation between Red Light and BC Craft

If you would invest  0.01  in BC Craft Supply on December 27, 2024 and sell it today you would earn a total of  0.00  from holding BC Craft Supply or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Red Light Holland  vs.  BC Craft Supply

Red Light Holland

Risk-Adjusted Performance

Very Weak

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

BC Craft Supply

Risk-Adjusted Performance

Very Weak

Over the last 90 days BC Craft Supply has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BC Craft 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 Light and BC Craft

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

The idea behind Red Light Holland and BC Craft Supply 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 CEOs Directory module to screen CEOs from public companies around the world.