Correlation Between Red Cat and Asahi Group
Can any of the company-specific risk be diversified away by investing in both Red Cat and Asahi Group 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 Cat and Asahi Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Cat Holdings and Asahi Group Holdings, you can compare the effects of market volatilities on Red Cat and Asahi Group 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 Cat with a short position of Asahi Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Asahi Group.
Diversification Opportunities for Red Cat and Asahi Group
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Red and Asahi is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Asahi Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Group Holdings and Red Cat 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 Cat Holdings are associated (or correlated) with Asahi Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Group Holdings has no effect on the direction of Red Cat i.e., Red Cat and Asahi Group go up and down completely randomly.
Pair Corralation between Red Cat and Asahi Group
Given the investment horizon of 90 days Red Cat is expected to generate 20.32 times less return on investment than Asahi Group. But when comparing it to its historical volatility, Red Cat Holdings is 11.26 times less risky than Asahi Group. It trades about 0.11 of its potential returns per unit of risk. Asahi Group Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,051 in Asahi Group Holdings on August 28, 2024 and sell it today you would lose (2,014) from holding Asahi Group Holdings or give up 66.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.61% |
| Values | Daily Returns |
Red Cat Holdings vs. Asahi Group Holdings
Performance |
| Timeline |
| Red Cat Holdings |
| Asahi Group Holdings |
Red Cat and Asahi Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Asahi Group
The main advantage of trading using opposite Red Cat and Asahi Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Asahi Group 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 Asahi Group will offset losses from the drop in Asahi Group's long position.The idea behind Red Cat Holdings and Asahi Group 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.| Asahi Group vs. Barfresh Food Group | Asahi Group vs. Fbec Worldwide | Asahi Group vs. Flow Beverage Corp | Asahi Group vs. Eq Energy Drink |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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