Correlation Between Red Hill and Asara Resources
Can any of the company-specific risk be diversified away by investing in both Red Hill and Asara Resources 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 Asara Resources 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 Asara Resources, you can compare the effects of market volatilities on Red Hill and Asara Resources 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 Asara Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Hill and Asara Resources.
Diversification Opportunities for Red Hill and Asara Resources
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Asara is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Red Hill Iron and Asara Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asara Resources 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 Asara Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asara Resources has no effect on the direction of Red Hill i.e., Red Hill and Asara Resources go up and down completely randomly.
Pair Corralation between Red Hill and Asara Resources
Assuming the 90 days trading horizon Red Hill Iron is expected to generate 0.34 times more return on investment than Asara Resources. However, Red Hill Iron is 2.94 times less risky than Asara Resources. It trades about 0.21 of its potential returns per unit of risk. Asara Resources is currently generating about 0.06 per unit of risk. If you would invest 395.00 in Red Hill Iron on August 28, 2024 and sell it today you would earn a total of 43.00 from holding Red Hill Iron or generate 10.89% 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. Asara Resources
Performance |
| Timeline |
| Red Hill Iron |
| Asara Resources |
Red Hill and Asara Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Hill and Asara Resources
The main advantage of trading using opposite Red Hill and Asara Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Hill position performs unexpectedly, Asara Resources 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 Asara Resources will offset losses from the drop in Asara Resources' long position.| Red Hill vs. Janison Education Group | Red Hill vs. Australian United Investment | Red Hill vs. Saferoads Holdings | Red Hill vs. Embark Education Group |
| Asara Resources vs. Audio Pixels Holdings | Asara Resources vs. Norwest Minerals | Asara Resources vs. Lindian Resources | Asara Resources vs. Resource Base |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Stocks Directory Find actively traded stocks across global markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |