Correlation Between Red Cat and EGF Theramed
Can any of the company-specific risk be diversified away by investing in both Red Cat and EGF Theramed 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 EGF Theramed 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 EGF Theramed Health, you can compare the effects of market volatilities on Red Cat and EGF Theramed 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 EGF Theramed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and EGF Theramed.
Diversification Opportunities for Red Cat and EGF Theramed
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and EGF is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and EGF Theramed Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EGF Theramed Health 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 EGF Theramed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EGF Theramed Health has no effect on the direction of Red Cat i.e., Red Cat and EGF Theramed go up and down completely randomly.
Pair Corralation between Red Cat and EGF Theramed
Given the investment horizon of 90 days Red Cat is expected to generate 3.43 times less return on investment than EGF Theramed. But when comparing it to its historical volatility, Red Cat Holdings is 5.23 times less risky than EGF Theramed. It trades about 0.1 of its potential returns per unit of risk. EGF Theramed Health is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 36.00 in EGF Theramed Health on August 30, 2024 and sell it today you would lose (15.00) from holding EGF Theramed Health or give up 41.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Cat Holdings vs. EGF Theramed Health
Performance |
| Timeline |
| Red Cat Holdings |
| EGF Theramed Health |
Red Cat and EGF Theramed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and EGF Theramed
The main advantage of trading using opposite Red Cat and EGF Theramed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, EGF Theramed 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 EGF Theramed will offset losses from the drop in EGF Theramed's long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| EGF Theramed vs. Reliq Health Technologies | EGF Theramed vs. Healthcare Triangle | EGF Theramed vs. Bullfrog AI Holdings, | EGF Theramed vs. Mednow Inc |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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