Correlation Between Red Hill and Mcmillan Shakespeare
Can any of the company-specific risk be diversified away by investing in both Red Hill and Mcmillan Shakespeare 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 Mcmillan Shakespeare 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 Mcmillan Shakespeare, you can compare the effects of market volatilities on Red Hill and Mcmillan Shakespeare 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 Mcmillan Shakespeare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Hill and Mcmillan Shakespeare.
Diversification Opportunities for Red Hill and Mcmillan Shakespeare
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Red and Mcmillan is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Red Hill Iron and Mcmillan Shakespeare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mcmillan Shakespeare 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 Mcmillan Shakespeare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mcmillan Shakespeare has no effect on the direction of Red Hill i.e., Red Hill and Mcmillan Shakespeare go up and down completely randomly.
Pair Corralation between Red Hill and Mcmillan Shakespeare
Assuming the 90 days trading horizon Red Hill Iron is expected to generate 1.36 times more return on investment than Mcmillan Shakespeare. However, Red Hill is 1.36 times more volatile than Mcmillan Shakespeare. It trades about 0.04 of its potential returns per unit of risk. Mcmillan Shakespeare is currently generating about 0.03 per unit of risk. If you would invest 292.00 in Red Hill Iron on September 5, 2024 and sell it today you would earn a total of 128.00 from holding Red Hill Iron or generate 43.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Hill Iron vs. Mcmillan Shakespeare
Performance |
| Timeline |
| Red Hill Iron |
| Mcmillan Shakespeare |
Red Hill and Mcmillan Shakespeare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Hill and Mcmillan Shakespeare
The main advantage of trading using opposite Red Hill and Mcmillan Shakespeare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Hill position performs unexpectedly, Mcmillan Shakespeare 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 Mcmillan Shakespeare will offset losses from the drop in Mcmillan Shakespeare'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 |
| Mcmillan Shakespeare vs. Renascor Resources | Mcmillan Shakespeare vs. Venus Metals | Mcmillan Shakespeare vs. Havilah Resources | Mcmillan Shakespeare vs. Red Hill Iron |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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