Correlation Between REDFLEX HOLDINGS and Graphite One
Can any of the company-specific risk be diversified away by investing in both REDFLEX HOLDINGS and Graphite One 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 REDFLEX HOLDINGS and Graphite One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REDFLEX HOLDINGS LTD and Graphite One, you can compare the effects of market volatilities on REDFLEX HOLDINGS and Graphite One 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 REDFLEX HOLDINGS with a short position of Graphite One. Check out your portfolio center. Please also check ongoing floating volatility patterns of REDFLEX HOLDINGS and Graphite One.
Diversification Opportunities for REDFLEX HOLDINGS and Graphite One
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between REDFLEX and Graphite is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding REDFLEX HOLDINGS LTD and Graphite One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphite One and REDFLEX HOLDINGS 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 REDFLEX HOLDINGS LTD are associated (or correlated) with Graphite One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphite One has no effect on the direction of REDFLEX HOLDINGS i.e., REDFLEX HOLDINGS and Graphite One go up and down completely randomly.
Pair Corralation between REDFLEX HOLDINGS and Graphite One
Assuming the 90 days horizon REDFLEX HOLDINGS LTD is expected to generate 5.27 times more return on investment than Graphite One. However, REDFLEX HOLDINGS is 5.27 times more volatile than Graphite One. It trades about 0.15 of its potential returns per unit of risk. Graphite One is currently generating about 0.04 per unit of risk. If you would invest 3.70 in REDFLEX HOLDINGS LTD on December 6, 2024 and sell it today you would earn a total of 1.00 from holding REDFLEX HOLDINGS LTD or generate 27.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REDFLEX HOLDINGS LTD vs. Graphite One
Performance |
| Timeline |
| REDFLEX HOLDINGS LTD |
| Graphite One |
REDFLEX HOLDINGS and Graphite One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REDFLEX HOLDINGS and Graphite One
The main advantage of trading using opposite REDFLEX HOLDINGS and Graphite One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REDFLEX HOLDINGS position performs unexpectedly, Graphite One 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 Graphite One will offset losses from the drop in Graphite One's long position.| REDFLEX HOLDINGS vs. GMxico Transportes SAB | ||
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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