Correlation Between Red Hill and Flagship Investments
Can any of the company-specific risk be diversified away by investing in both Red Hill and Flagship 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 Flagship 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 Flagship Investments, you can compare the effects of market volatilities on Red Hill and Flagship 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 Flagship Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Hill and Flagship Investments.
Diversification Opportunities for Red Hill and Flagship Investments
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Red and Flagship is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Red Hill Iron and Flagship Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flagship 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 Flagship Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flagship Investments has no effect on the direction of Red Hill i.e., Red Hill and Flagship Investments go up and down completely randomly.
Pair Corralation between Red Hill and Flagship Investments
Assuming the 90 days trading horizon Red Hill Iron is expected to under-perform the Flagship Investments. But the stock apears to be less risky and, when comparing its historical volatility, Red Hill Iron is 1.04 times less risky than Flagship Investments. The stock trades about -0.45 of its potential returns per unit of risk. The Flagship Investments is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 207.00 in Flagship Investments on December 4, 2024 and sell it today you would earn a total of 4.00 from holding Flagship Investments or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Red Hill Iron vs. Flagship Investments
Performance |
| Timeline |
| Red Hill Iron |
| Flagship Investments |
Red Hill and Flagship Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Hill and Flagship Investments
The main advantage of trading using opposite Red Hill and Flagship Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Hill position performs unexpectedly, Flagship 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 Flagship Investments will offset losses from the drop in Flagship Investments' long position.| Red Hill vs. Clime Investment Management | Red Hill vs. Saferoads Holdings | Red Hill vs. TPG Telecom | Red Hill vs. Alternative Investment Trust |
| Flagship Investments vs. Dexus Convenience Retail | Flagship Investments vs. Djerriwarrh Investments | Flagship Investments vs. Steamships Trading | Flagship Investments vs. Centrex Metals |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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