Correlation Between United Lithium and REDFLEX HOLDINGS
Can any of the company-specific risk be diversified away by investing in both United Lithium and REDFLEX HOLDINGS 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 United Lithium and REDFLEX HOLDINGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Lithium Corp and REDFLEX HOLDINGS LTD, you can compare the effects of market volatilities on United Lithium and REDFLEX HOLDINGS 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 United Lithium with a short position of REDFLEX HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Lithium and REDFLEX HOLDINGS.
Diversification Opportunities for United Lithium and REDFLEX HOLDINGS
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and REDFLEX is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding United Lithium Corp and REDFLEX HOLDINGS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDFLEX HOLDINGS LTD and United Lithium 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 United Lithium Corp are associated (or correlated) with REDFLEX HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDFLEX HOLDINGS LTD has no effect on the direction of United Lithium i.e., United Lithium and REDFLEX HOLDINGS go up and down completely randomly.
Pair Corralation between United Lithium and REDFLEX HOLDINGS
Assuming the 90 days horizon United Lithium is expected to generate 2.64 times less return on investment than REDFLEX HOLDINGS. But when comparing it to its historical volatility, United Lithium Corp is 1.25 times less risky than REDFLEX HOLDINGS. It trades about 0.02 of its potential returns per unit of risk. REDFLEX HOLDINGS LTD is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 17.00 in REDFLEX HOLDINGS LTD on August 29, 2024 and sell it today you would lose (13.01) from holding REDFLEX HOLDINGS LTD or give up 76.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Lithium Corp vs. REDFLEX HOLDINGS LTD
Performance |
| Timeline |
| United Lithium Corp |
| REDFLEX HOLDINGS LTD |
United Lithium and REDFLEX HOLDINGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Lithium and REDFLEX HOLDINGS
The main advantage of trading using opposite United Lithium and REDFLEX HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Lithium position performs unexpectedly, REDFLEX HOLDINGS 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 REDFLEX HOLDINGS will offset losses from the drop in REDFLEX HOLDINGS's long position.| United Lithium vs. Alpha Copper Corp | United Lithium vs. REDFLEX HOLDINGS LTD | United Lithium vs. Global Helium Corp | United Lithium vs. Ridgestone Mining |
| REDFLEX HOLDINGS vs. RBC Bearings Incorporated | REDFLEX HOLDINGS vs. Stevanato Group SpA | REDFLEX HOLDINGS vs. Merit Medical Systems | REDFLEX HOLDINGS vs. Repligen |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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