Correlation Between Kits Eyecare and Redishred Capital

Can any of the company-specific risk be diversified away by investing in both Kits Eyecare and Redishred Capital 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 Kits Eyecare and Redishred Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kits Eyecare and Redishred Capital Corp, you can compare the effects of market volatilities on Kits Eyecare and Redishred Capital 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 Kits Eyecare with a short position of Redishred Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kits Eyecare and Redishred Capital.

Diversification Opportunities for Kits Eyecare and Redishred Capital

-0.69

Correlation Coefficient

Kits Eyecare  Redishred Capital

Excellent diversification

The 3 months correlation between Kits and Redishred is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kits Eyecare and Redishred Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redishred Capital Corp and Kits Eyecare 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 Kits Eyecare are associated (or correlated) with Redishred Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redishred Capital Corp has no effect on the direction of Kits Eyecare i.e., Kits Eyecare and Redishred Capital go up and down completely randomly.

Pair Corralation between Kits Eyecare and Redishred Capital

Assuming the 90 days trading horizon Kits Eyecare is expected to under-perform the Redishred Capital. But the stock apears to be less risky and, when comparing its historical volatility, Kits Eyecare is 1.6 times less risky than Redishred Capital. The stock trades about -0.05 of its potential returns per unit of risk. The Redishred Capital Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  384.00  in Redishred Capital Corp on September 23, 2024 and sell it today you would earn a total of  104.00  from holding Redishred Capital Corp or generate 27.08% return on investment over 90 days.

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

Kits Eyecare  vs.  Redishred Capital Corp

Kits Eyecare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kits Eyecare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Kits Eyecare is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Redishred Capital Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Redishred Capital Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Redishred Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kits Eyecare and Redishred Capital

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

The idea behind Kits Eyecare and Redishred Capital Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.