Correlation Between Red Moon and Neo Battery
Can any of the company-specific risk be diversified away by investing in both Red Moon and Neo Battery 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 Neo Battery 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 Neo Battery Materials, you can compare the effects of market volatilities on Red Moon and Neo Battery 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 Neo Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Moon and Neo Battery.
Diversification Opportunities for Red Moon and Neo Battery
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Red and Neo is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Red Moon Resources and Neo Battery Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Battery Materials 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 Neo Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Battery Materials has no effect on the direction of Red Moon i.e., Red Moon and Neo Battery go up and down completely randomly.
Pair Corralation between Red Moon and Neo Battery
Assuming the 90 days horizon Red Moon Resources is expected to under-perform the Neo Battery. But the otc stock apears to be less risky and, when comparing its historical volatility, Red Moon Resources is 14.74 times less risky than Neo Battery. The otc stock trades about -0.03 of its potential returns per unit of risk. The Neo Battery Materials is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Neo Battery Materials on August 30, 2024 and sell it today you would earn a total of 46.00 from holding Neo Battery Materials or generate 353.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Moon Resources vs. Neo Battery Materials
Performance |
| Timeline |
| Red Moon Resources |
| Neo Battery Materials |
Red Moon and Neo Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Moon and Neo Battery
The main advantage of trading using opposite Red Moon and Neo Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Moon position performs unexpectedly, Neo Battery 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 Neo Battery will offset losses from the drop in Neo Battery's long position.| Red Moon vs. Aurwest Resources | Red Moon vs. Benton Resources | Red Moon vs. Pan Global Resources | Red Moon vs. Tower Resources |
| Neo Battery vs. Pampa Metals | Neo Battery vs. Pegasus Resources | Neo Battery vs. Red Moon Resources | Neo Battery vs. Sherritt International |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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