Correlation Between Red Hill and ARN Media
Can any of the company-specific risk be diversified away by investing in both Red Hill and ARN Media 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 Hill and ARN Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Hill Iron and ARN Media Limited, you can compare the effects of market volatilities on Red Hill and ARN Media 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 Hill with a short position of ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Hill and ARN Media.
Diversification Opportunities for Red Hill and ARN Media
Average diversification
The 3 months correlation between Red and ARN is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Red Hill Iron and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media Limited and Red Hill 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 Hill Iron are associated (or correlated) with ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of Red Hill i.e., Red Hill and ARN Media go up and down completely randomly.
Pair Corralation between Red Hill and ARN Media
Assuming the 90 days trading horizon Red Hill Iron is expected to generate 0.68 times more return on investment than ARN Media. However, Red Hill Iron is 1.47 times less risky than ARN Media. It trades about -0.03 of its potential returns per unit of risk. ARN Media Limited is currently generating about -0.29 per unit of risk. If you would invest 411.00 in Red Hill Iron on November 1, 2024 and sell it today you would lose (4.00) from holding Red Hill Iron or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Hill Iron vs. ARN Media Limited
Performance |
| Timeline |
| Red Hill Iron |
| ARN Media Limited |
Red Hill and ARN Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Hill and ARN Media
The main advantage of trading using opposite Red Hill and ARN Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Hill position performs unexpectedly, ARN Media 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 ARN Media will offset losses from the drop in ARN Media's long position.| Red Hill vs. Black Rock Mining | Red Hill vs. Aeon Metals | Red Hill vs. Pure Foods Tasmania | Red Hill vs. Autosports Group |
| ARN Media vs. Readytech Holdings | ARN Media vs. Genetic Technologies | ARN Media vs. Red Hill Iron | ARN Media vs. Bluescope Steel |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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