Correlation Between REDFLEX HOLDINGS and United Lithium
Can any of the company-specific risk be diversified away by investing in both REDFLEX HOLDINGS and United Lithium 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 United Lithium 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 United Lithium Corp, you can compare the effects of market volatilities on REDFLEX HOLDINGS and United Lithium 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 United Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of REDFLEX HOLDINGS and United Lithium.
Diversification Opportunities for REDFLEX HOLDINGS and United Lithium
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between REDFLEX and United is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding REDFLEX HOLDINGS LTD and United Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Lithium Corp 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 United Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Lithium Corp has no effect on the direction of REDFLEX HOLDINGS i.e., REDFLEX HOLDINGS and United Lithium go up and down completely randomly.
Pair Corralation between REDFLEX HOLDINGS and United Lithium
Assuming the 90 days horizon REDFLEX HOLDINGS LTD is expected to generate 1.91 times more return on investment than United Lithium. However, REDFLEX HOLDINGS is 1.91 times more volatile than United Lithium Corp. It trades about 0.09 of its potential returns per unit of risk. United Lithium Corp is currently generating about -0.02 per unit of risk. If you would invest 2.92 in REDFLEX HOLDINGS LTD on August 25, 2024 and sell it today you would lose (0.07) from holding REDFLEX HOLDINGS LTD or give up 2.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
REDFLEX HOLDINGS LTD vs. United Lithium Corp
Performance |
| Timeline |
| REDFLEX HOLDINGS LTD |
| United Lithium Corp |
REDFLEX HOLDINGS and United Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REDFLEX HOLDINGS and United Lithium
The main advantage of trading using opposite REDFLEX HOLDINGS and United Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REDFLEX HOLDINGS position performs unexpectedly, United Lithium 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 United Lithium will offset losses from the drop in United Lithium's long position.| REDFLEX HOLDINGS vs. Norra Metals Corp | REDFLEX HOLDINGS vs. ZincX Resources Corp | REDFLEX HOLDINGS vs. Nuinsco Resources Limited | REDFLEX HOLDINGS vs. South Star Battery |
| United Lithium vs. Alpha Copper Corp | United Lithium vs. REDFLEX HOLDINGS LTD | United Lithium vs. Global Helium Corp | United Lithium vs. Ridgestone Mining |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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