Correlation Between Red Hill and AiMedia Technologies
Can any of the company-specific risk be diversified away by investing in both Red Hill and AiMedia Technologies 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 AiMedia Technologies 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 AiMedia Technologies, you can compare the effects of market volatilities on Red Hill and AiMedia Technologies 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 AiMedia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Hill and AiMedia Technologies.
Diversification Opportunities for Red Hill and AiMedia Technologies
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Red and AiMedia is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Red Hill Iron and AiMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AiMedia Technologies 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 AiMedia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AiMedia Technologies has no effect on the direction of Red Hill i.e., Red Hill and AiMedia Technologies go up and down completely randomly.
Pair Corralation between Red Hill and AiMedia Technologies
Assuming the 90 days trading horizon Red Hill Iron is expected to generate 0.29 times more return on investment than AiMedia Technologies. However, Red Hill Iron is 3.45 times less risky than AiMedia Technologies. It trades about 0.23 of its potential returns per unit of risk. AiMedia Technologies is currently generating about 0.01 per unit of risk. If you would invest 405.00 in Red Hill Iron on September 19, 2024 and sell it today you would earn a total of 29.00 from holding Red Hill Iron or generate 7.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Hill Iron vs. AiMedia Technologies
Performance |
| Timeline |
| Red Hill Iron |
| AiMedia Technologies |
Red Hill and AiMedia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Hill and AiMedia Technologies
The main advantage of trading using opposite Red Hill and AiMedia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Hill position performs unexpectedly, AiMedia Technologies 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 AiMedia Technologies will offset losses from the drop in AiMedia Technologies' long position.| Red Hill vs. Farm Pride Foods | Red Hill vs. Queste Communications | Red Hill vs. Platinum Asia Investments | Red Hill vs. Flagship Investments |
| AiMedia Technologies vs. Red Hill Iron | AiMedia Technologies vs. Champion Iron | AiMedia Technologies vs. Global Data Centre | AiMedia Technologies vs. Retail Food Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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