Correlation Between Regis Healthcare and Red Hill
Can any of the company-specific risk be diversified away by investing in both Regis Healthcare and Red Hill 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 Regis Healthcare and Red Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regis Healthcare and Red Hill Iron, you can compare the effects of market volatilities on Regis Healthcare and Red Hill 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 Regis Healthcare with a short position of Red Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regis Healthcare and Red Hill.
Diversification Opportunities for Regis Healthcare and Red Hill
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Regis and Red is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Regis Healthcare and Red Hill Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Hill Iron and Regis Healthcare 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 Regis Healthcare are associated (or correlated) with Red Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Hill Iron has no effect on the direction of Regis Healthcare i.e., Regis Healthcare and Red Hill go up and down completely randomly.
Pair Corralation between Regis Healthcare and Red Hill
Assuming the 90 days trading horizon Regis Healthcare is expected to generate 0.85 times more return on investment than Red Hill. However, Regis Healthcare is 1.18 times less risky than Red Hill. It trades about 0.14 of its potential returns per unit of risk. Red Hill Iron is currently generating about 0.02 per unit of risk. If you would invest 153.00 in Regis Healthcare on December 12, 2024 and sell it today you would earn a total of 466.00 from holding Regis Healthcare or generate 304.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regis Healthcare vs. Red Hill Iron
Performance |
| Timeline |
| Regis Healthcare |
| Red Hill Iron |
Regis Healthcare and Red Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regis Healthcare and Red Hill
The main advantage of trading using opposite Regis Healthcare and Red Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regis Healthcare position performs unexpectedly, Red Hill 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 Red Hill will offset losses from the drop in Red Hill's long position.| Regis Healthcare vs. Strickland Metals | ||
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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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