Correlation Between Red Cat and Bank Negara
Can any of the company-specific risk be diversified away by investing in both Red Cat and Bank Negara 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 Bank Negara 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 Bank Negara Indonesia, you can compare the effects of market volatilities on Red Cat and Bank Negara 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 Bank Negara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Bank Negara.
Diversification Opportunities for Red Cat and Bank Negara
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Red and Bank is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Bank Negara Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Negara Indonesia 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 Bank Negara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Negara Indonesia has no effect on the direction of Red Cat i.e., Red Cat and Bank Negara go up and down completely randomly.
Pair Corralation between Red Cat and Bank Negara
Given the investment horizon of 90 days Red Cat Holdings is expected to generate 2.36 times more return on investment than Bank Negara. However, Red Cat is 2.36 times more volatile than Bank Negara Indonesia. It trades about 0.54 of its potential returns per unit of risk. Bank Negara Indonesia is currently generating about -0.04 per unit of risk. If you would invest 317.00 in Red Cat Holdings on August 31, 2024 and sell it today you would earn a total of 610.00 from holding Red Cat Holdings or generate 192.43% 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. Bank Negara Indonesia
Performance |
| Timeline |
| Red Cat Holdings |
| Bank Negara Indonesia |
Red Cat and Bank Negara Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Bank Negara
The main advantage of trading using opposite Red Cat and Bank Negara positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Bank Negara 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 Bank Negara will offset losses from the drop in Bank Negara's long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| Bank Negara vs. Banco Bradesco SA | Bank Negara vs. Itau Unibanco Banco | Bank Negara vs. Lloyds Banking Group | Bank Negara vs. Deutsche Bank AG |
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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