Correlation Between Red Cat and Global Li-Ion
Can any of the company-specific risk be diversified away by investing in both Red Cat and Global Li-Ion 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 Global Li-Ion 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 Global Li Ion Graphite, you can compare the effects of market volatilities on Red Cat and Global Li-Ion 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 Global Li-Ion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Global Li-Ion.
Diversification Opportunities for Red Cat and Global Li-Ion
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Red and Global is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Global Li Ion Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Li Ion 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 Global Li-Ion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Li Ion has no effect on the direction of Red Cat i.e., Red Cat and Global Li-Ion go up and down completely randomly.
Pair Corralation between Red Cat and Global Li-Ion
Given the investment horizon of 90 days Red Cat Holdings is expected to generate 0.48 times more return on investment than Global Li-Ion. However, Red Cat Holdings is 2.08 times less risky than Global Li-Ion. It trades about 0.35 of its potential returns per unit of risk. Global Li Ion Graphite is currently generating about 0.0 per unit of risk. If you would invest 254.00 in Red Cat Holdings on August 29, 2024 and sell it today you would earn a total of 582.00 from holding Red Cat Holdings or generate 229.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Red Cat Holdings vs. Global Li Ion Graphite
Performance |
| Timeline |
| Red Cat Holdings |
| Global Li Ion |
Red Cat and Global Li-Ion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Global Li-Ion
The main advantage of trading using opposite Red Cat and Global Li-Ion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Global Li-Ion 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 Global Li-Ion will offset losses from the drop in Global Li-Ion's long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| Global Li-Ion vs. Nova Lithium Corp | Global Li-Ion vs. Qubec Nickel Corp | Global Li-Ion vs. SPC Nickel Corp | Global Li-Ion vs. CDN Maverick Capital |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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