Correlation Between Red Hill and BKI Investment
Can any of the company-specific risk be diversified away by investing in both Red Hill and BKI 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 BKI 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 BKI Investment, you can compare the effects of market volatilities on Red Hill and BKI 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 BKI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Hill and BKI Investment.
Diversification Opportunities for Red Hill and BKI Investment
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Red and BKI is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Red Hill Iron and BKI Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKI 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 BKI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKI Investment has no effect on the direction of Red Hill i.e., Red Hill and BKI Investment go up and down completely randomly.
Pair Corralation between Red Hill and BKI Investment
Assuming the 90 days trading horizon Red Hill Iron is expected to generate 4.34 times more return on investment than BKI Investment. However, Red Hill is 4.34 times more volatile than BKI Investment. It trades about 0.21 of its potential returns per unit of risk. BKI Investment is currently generating about 0.0 per unit of risk. 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. BKI Investment
Performance |
| Timeline |
| Red Hill Iron |
| BKI Investment |
Red Hill and BKI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Hill and BKI Investment
The main advantage of trading using opposite Red Hill and BKI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Hill position performs unexpectedly, BKI 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 BKI Investment will offset losses from the drop in BKI 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 |
| BKI Investment vs. Australian Foundation Investment | BKI Investment vs. GQG Partners DRC | BKI Investment vs. Metrics Master Income | BKI Investment vs. L1 Long Short |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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