Correlation Between Red Cat and Mytilineos Holdings
Can any of the company-specific risk be diversified away by investing in both Red Cat and Mytilineos Holdings 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 Mytilineos Holdings 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 Mytilineos Holdings SA, you can compare the effects of market volatilities on Red Cat and Mytilineos Holdings 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 Mytilineos Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Mytilineos Holdings.
Diversification Opportunities for Red Cat and Mytilineos Holdings
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Red and Mytilineos is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Mytilineos Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mytilineos 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 Mytilineos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mytilineos Holdings has no effect on the direction of Red Cat i.e., Red Cat and Mytilineos Holdings go up and down completely randomly.
Pair Corralation between Red Cat and Mytilineos Holdings
Given the investment horizon of 90 days Red Cat Holdings is expected to generate 1.98 times more return on investment than Mytilineos Holdings. However, Red Cat is 1.98 times more volatile than Mytilineos Holdings SA. It trades about 0.27 of its potential returns per unit of risk. Mytilineos Holdings SA is currently generating about -0.01 per unit of risk. If you would invest 285.00 in Red Cat Holdings on August 28, 2024 and sell it today you would earn a total of 676.00 from holding Red Cat Holdings or generate 237.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Cat Holdings vs. Mytilineos Holdings SA
Performance |
| Timeline |
| Red Cat Holdings |
| Mytilineos Holdings |
Red Cat and Mytilineos Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Mytilineos Holdings
The main advantage of trading using opposite Red Cat and Mytilineos Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Mytilineos Holdings 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 Mytilineos Holdings will offset losses from the drop in Mytilineos Holdings' long position.The idea behind Red Cat Holdings and Mytilineos Holdings SA 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.| Mytilineos Holdings vs. Honeywell International | Mytilineos Holdings vs. MDU Resources Group | Mytilineos Holdings vs. Compass Diversified Holdings | Mytilineos Holdings vs. Valmont Industries |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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