Correlation Between Flagship Investments and Red Hill
Can any of the company-specific risk be diversified away by investing in both Flagship Investments 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 Flagship Investments and Red Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flagship Investments and Red Hill Iron, you can compare the effects of market volatilities on Flagship Investments 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 Flagship Investments with a short position of Red Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flagship Investments and Red Hill.
Diversification Opportunities for Flagship Investments and Red Hill
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Flagship and Red is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments 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 Flagship Investments 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 Flagship Investments 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 Flagship Investments i.e., Flagship Investments and Red Hill go up and down completely randomly.
Pair Corralation between Flagship Investments and Red Hill
Assuming the 90 days trading horizon Flagship Investments is expected to generate 1.3 times less return on investment than Red Hill. But when comparing it to its historical volatility, Flagship Investments is 1.89 times less risky than Red Hill. It trades about 0.05 of its potential returns per unit of risk. Red Hill Iron is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 339.00 in Red Hill Iron on September 19, 2024 and sell it today you would earn a total of 95.00 from holding Red Hill Iron or generate 28.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flagship Investments vs. Red Hill Iron
Performance |
| Timeline |
| Flagship Investments |
| Red Hill Iron |
Flagship Investments and Red Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flagship Investments and Red Hill
The main advantage of trading using opposite Flagship Investments and Red Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flagship Investments 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.| Flagship Investments vs. Australian Foundation Investment | Flagship Investments vs. Metrics Master Income | Flagship Investments vs. L1 Long Short | Flagship Investments vs. Wam Leaders |
| Red Hill vs. Farm Pride Foods | Red Hill vs. Queste Communications | Red Hill vs. Platinum Asia Investments | Red Hill vs. Flagship Investments |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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