Correlation Between Red Cat and Golden Star
Can any of the company-specific risk be diversified away by investing in both Red Cat and Golden Star 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 Golden Star 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 Golden Star Resource, you can compare the effects of market volatilities on Red Cat and Golden Star 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 Golden Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Golden Star.
Diversification Opportunities for Red Cat and Golden Star
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Golden is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Golden Star Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Star Resource 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 Golden Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Star Resource has no effect on the direction of Red Cat i.e., Red Cat and Golden Star go up and down completely randomly.
Pair Corralation between Red Cat and Golden Star
Given the investment horizon of 90 days Red Cat Holdings is expected to generate 0.58 times more return on investment than Golden Star. However, Red Cat Holdings is 1.74 times less risky than Golden Star. It trades about 0.08 of its potential returns per unit of risk. Golden Star Resource is currently generating about 0.03 per unit of risk. If you would invest 101.00 in Red Cat Holdings on January 11, 2025 and sell it today you would earn a total of 500.00 from holding Red Cat Holdings or generate 495.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.06% |
| Values | Daily Returns |
Red Cat Holdings vs. Golden Star Resource
Performance |
| Timeline |
| Red Cat Holdings |
| Golden Star Resource |
Red Cat and Golden Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Golden Star
The main advantage of trading using opposite Red Cat and Golden Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Golden Star 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 Golden Star will offset losses from the drop in Golden Star's long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| Golden Star vs. Streamline Health Solutions | Golden Star vs. Western Digital | Golden Star vs. Estee Lauder Companies | Golden Star vs. Acme United |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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