Correlation Between Red Hill and Argo Investments
Can any of the company-specific risk be diversified away by investing in both Red Hill and Argo Investments 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 Argo Investments 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 Argo Investments, you can compare the effects of market volatilities on Red Hill and Argo Investments 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 Argo Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Hill and Argo Investments.
Diversification Opportunities for Red Hill and Argo Investments
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Argo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Red Hill Iron and Argo Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Investments 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 Argo Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Investments has no effect on the direction of Red Hill i.e., Red Hill and Argo Investments go up and down completely randomly.
Pair Corralation between Red Hill and Argo Investments
Assuming the 90 days trading horizon Red Hill Iron is expected to under-perform the Argo Investments. In addition to that, Red Hill is 2.38 times more volatile than Argo Investments. It trades about -0.09 of its total potential returns per unit of risk. Argo Investments is currently generating about 0.03 per unit of volatility. If you would invest 899.00 in Argo Investments on November 4, 2024 and sell it today you would earn a total of 3.00 from holding Argo Investments or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Hill Iron vs. Argo Investments
Performance |
| Timeline |
| Red Hill Iron |
| Argo Investments |
Red Hill and Argo Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Hill and Argo Investments
The main advantage of trading using opposite Red Hill and Argo Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Hill position performs unexpectedly, Argo Investments 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 Argo Investments will offset losses from the drop in Argo Investments' long position.| Red Hill vs. Genetic Technologies | Red Hill vs. ACDC Metals | Red Hill vs. Ras Technology Holdings | Red Hill vs. WiseTech Global Limited |
| Argo Investments vs. MotorCycle Holdings | Argo Investments vs. K2 Asset Management | Argo Investments vs. Aussie Broadband | Argo Investments vs. Platinum Asset Management |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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