Correlation Between Red Hill and Alternative Investment
Can any of the company-specific risk be diversified away by investing in both Red Hill and Alternative Investment 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 Alternative Investment 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 Alternative Investment Trust, you can compare the effects of market volatilities on Red Hill and Alternative Investment 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 Alternative Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Hill and Alternative Investment.
Diversification Opportunities for Red Hill and Alternative Investment
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Red and Alternative is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Red Hill Iron and Alternative Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Investment 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 Alternative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Investment has no effect on the direction of Red Hill i.e., Red Hill and Alternative Investment go up and down completely randomly.
Pair Corralation between Red Hill and Alternative Investment
If you would invest 395.00 in Red Hill Iron on August 29, 2024 and sell it today you would earn a total of 45.00 from holding Red Hill Iron or generate 11.39% 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. Alternative Investment Trust
Performance |
| Timeline |
| Red Hill Iron |
| Alternative Investment |
Red Hill and Alternative Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Hill and Alternative Investment
The main advantage of trading using opposite Red Hill and Alternative Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Hill position performs unexpectedly, Alternative Investment 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 Alternative Investment will offset losses from the drop in Alternative Investment's long position.| Red Hill vs. Northern Star Resources | Red Hill vs. Evolution Mining | Red Hill vs. Bluescope Steel | Red Hill vs. Sandfire Resources NL |
| Alternative Investment vs. National Australia Bank | Alternative Investment vs. National Australia Bank | Alternative Investment vs. Westpac Banking | Alternative Investment vs. National Australia Bank |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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