Correlation Between AGM Group and Red Cat
Can any of the company-specific risk be diversified away by investing in both AGM Group and Red Cat 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 AGM Group and Red Cat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGM Group Holdings and Red Cat Holdings, you can compare the effects of market volatilities on AGM Group and Red Cat 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 AGM Group with a short position of Red Cat. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGM Group and Red Cat.
Diversification Opportunities for AGM Group and Red Cat
Weak diversification
The 3 months correlation between AGM and Red is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding AGM Group Holdings and Red Cat Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Cat Holdings and AGM Group 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 AGM Group Holdings are associated (or correlated) with Red Cat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Cat Holdings has no effect on the direction of AGM Group i.e., AGM Group and Red Cat go up and down completely randomly.
Pair Corralation between AGM Group and Red Cat
Given the investment horizon of 90 days AGM Group Holdings is expected to under-perform the Red Cat. But the stock apears to be less risky and, when comparing its historical volatility, AGM Group Holdings is 2.28 times less risky than Red Cat. The stock trades about -0.05 of its potential returns per unit of risk. The Red Cat Holdings is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest 273.00 in Red Cat Holdings on August 24, 2024 and sell it today you would earn a total of 457.00 from holding Red Cat Holdings or generate 167.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGM Group Holdings vs. Red Cat Holdings
Performance |
| Timeline |
| AGM Group Holdings |
| Red Cat Holdings |
AGM Group and Red Cat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGM Group and Red Cat
The main advantage of trading using opposite AGM Group and Red Cat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGM Group position performs unexpectedly, Red Cat 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 Cat will offset losses from the drop in Red Cat's long position.| AGM Group vs. TransAct Technologies Incorporated | AGM Group vs. Key Tronic | AGM Group vs. Identiv | AGM Group vs. AstroNova |
| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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