Correlation Between Red Cat and Bilfinger
Can any of the company-specific risk be diversified away by investing in both Red Cat and Bilfinger 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 Bilfinger 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 Bilfinger SE ADR, you can compare the effects of market volatilities on Red Cat and Bilfinger 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 Bilfinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Bilfinger.
Diversification Opportunities for Red Cat and Bilfinger
Very good diversification
The 3 months correlation between Red and Bilfinger is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Bilfinger SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilfinger SE ADR 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 Bilfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilfinger SE ADR has no effect on the direction of Red Cat i.e., Red Cat and Bilfinger go up and down completely randomly.
Pair Corralation between Red Cat and Bilfinger
Given the investment horizon of 90 days Red Cat Holdings is expected to generate 2.1 times more return on investment than Bilfinger. However, Red Cat is 2.1 times more volatile than Bilfinger SE ADR. It trades about 0.09 of its potential returns per unit of risk. Bilfinger SE ADR is currently generating about 0.05 per unit of risk. If you would invest 115.00 in Red Cat Holdings on August 29, 2024 and sell it today you would earn a total of 721.00 from holding Red Cat Holdings or generate 626.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 79.8% |
| Values | Daily Returns |
Red Cat Holdings vs. Bilfinger SE ADR
Performance |
| Timeline |
| Red Cat Holdings |
| Bilfinger SE ADR |
Red Cat and Bilfinger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Bilfinger
The main advantage of trading using opposite Red Cat and Bilfinger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Bilfinger 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 Bilfinger will offset losses from the drop in Bilfinger's long position.The idea behind Red Cat Holdings and Bilfinger SE ADR 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.| Bilfinger vs. Aecom Technology | Bilfinger vs. Matrix Service Co | Bilfinger vs. MYR Group | Bilfinger vs. Fluor |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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