Correlation Between GREENLIGHT CAP and REDSUN PROPERTIES

Can any of the company-specific risk be diversified away by investing in both GREENLIGHT CAP and REDSUN PROPERTIES 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 GREENLIGHT CAP and REDSUN PROPERTIES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GREENLIGHT CAP RE and REDSUN PROPERTIES GROUP, you can compare the effects of market volatilities on GREENLIGHT CAP and REDSUN PROPERTIES 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 GREENLIGHT CAP with a short position of REDSUN PROPERTIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREENLIGHT CAP and REDSUN PROPERTIES.

Diversification Opportunities for GREENLIGHT CAP and REDSUN PROPERTIES

-0.51

Correlation Coefficient

GREENLIGHT CAP  REDSUN PROPERTIES

Excellent diversification

The 3 months correlation between GREENLIGHT and REDSUN is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding GREENLIGHT CAP RE and REDSUN PROPERTIES GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDSUN PROPERTIES and GREENLIGHT CAP 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 GREENLIGHT CAP RE are associated (or correlated) with REDSUN PROPERTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDSUN PROPERTIES has no effect on the direction of GREENLIGHT CAP i.e., GREENLIGHT CAP and REDSUN PROPERTIES go up and down completely randomly.

Pair Corralation between GREENLIGHT CAP and REDSUN PROPERTIES

Assuming the 90 days trading horizon GREENLIGHT CAP is expected to generate 78.33 times less return on investment than REDSUN PROPERTIES. But when comparing it to its historical volatility, GREENLIGHT CAP RE is 26.25 times less risky than REDSUN PROPERTIES. It trades about 0.05 of its potential returns per unit of risk. REDSUN PROPERTIES GROUP is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.10  in REDSUN PROPERTIES GROUP on September 23, 2024 and sell it today you would earn a total of  0.15  from holding REDSUN PROPERTIES GROUP or generate 150.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

GREENLIGHT CAP RE  vs.  REDSUN PROPERTIES GROUP

GREENLIGHT CAP RE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GREENLIGHT CAP RE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, GREENLIGHT CAP is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

REDSUN PROPERTIES

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in REDSUN PROPERTIES GROUP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, REDSUN PROPERTIES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GREENLIGHT CAP and REDSUN PROPERTIES

The main advantage of trading using opposite GREENLIGHT CAP and REDSUN PROPERTIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GREENLIGHT CAP position performs unexpectedly, REDSUN PROPERTIES 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 REDSUN PROPERTIES will offset losses from the drop in REDSUN PROPERTIES's long position.

The idea behind GREENLIGHT CAP RE and REDSUN PROPERTIES GROUP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 CEOs Directory module to screen CEOs from public companies around the world.