Correlation Between Red Moon and Freegold Ventures
Can any of the company-specific risk be diversified away by investing in both Red Moon and Freegold Ventures 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 Moon and Freegold Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Moon Resources and Freegold Ventures Limited, you can compare the effects of market volatilities on Red Moon and Freegold Ventures 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 Moon with a short position of Freegold Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Moon and Freegold Ventures.
Diversification Opportunities for Red Moon and Freegold Ventures
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Red and Freegold is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Red Moon Resources and Freegold Ventures Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freegold Ventures and Red Moon 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 Moon Resources are associated (or correlated) with Freegold Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freegold Ventures has no effect on the direction of Red Moon i.e., Red Moon and Freegold Ventures go up and down completely randomly.
Pair Corralation between Red Moon and Freegold Ventures
Assuming the 90 days horizon Red Moon Resources is expected to generate 0.63 times more return on investment than Freegold Ventures. However, Red Moon Resources is 1.59 times less risky than Freegold Ventures. It trades about -0.22 of its potential returns per unit of risk. Freegold Ventures Limited is currently generating about -0.25 per unit of risk. If you would invest 49.00 in Red Moon Resources on August 26, 2024 and sell it today you would lose (5.00) from holding Red Moon Resources or give up 10.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Moon Resources vs. Freegold Ventures Limited
Performance |
| Timeline |
| Red Moon Resources |
| Freegold Ventures |
Red Moon and Freegold Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Moon and Freegold Ventures
The main advantage of trading using opposite Red Moon and Freegold Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Moon position performs unexpectedly, Freegold Ventures 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 Freegold Ventures will offset losses from the drop in Freegold Ventures' long position.| Red Moon vs. Aurwest Resources | Red Moon vs. Benton Resources | Red Moon vs. Pan Global Resources | Red Moon vs. Tower Resources |
| Freegold Ventures vs. Mundoro Capital | Freegold Ventures vs. Norra Metals Corp | Freegold Ventures vs. E79 Resources Corp | Freegold Ventures vs. Voltage Metals Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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