Correlation Between Mason Graphite and REDFLEX HOLDINGS

Can any of the company-specific risk be diversified away by investing in both Mason Graphite 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 Mason Graphite and REDFLEX HOLDINGS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mason Graphite and REDFLEX HOLDINGS LTD, you can compare the effects of market volatilities on Mason Graphite 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 Mason Graphite with a short position of REDFLEX HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mason Graphite and REDFLEX HOLDINGS.

Diversification Opportunities for Mason Graphite and REDFLEX HOLDINGS

0.33

Correlation Coefficient

Mason Graphite  REDFLEX HOLDINGS

Weak diversification

The 3 months correlation between Mason and REDFLEX is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Mason Graphite 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 Mason Graphite 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 Mason Graphite 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 Mason Graphite i.e., Mason Graphite and REDFLEX HOLDINGS go up and down completely randomly.

Pair Corralation between Mason Graphite and REDFLEX HOLDINGS

Assuming the 90 days horizon Mason Graphite is expected to under-perform the REDFLEX HOLDINGS. But the otc stock apears to be less risky and, when comparing its historical volatility, Mason Graphite is 2.88 times less risky than REDFLEX HOLDINGS. The otc stock trades about -0.09 of its potential returns per unit of risk. The REDFLEX HOLDINGS LTD is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3.50  in REDFLEX HOLDINGS LTD on August 31, 2024 and sell it today you would lose (0.71) from holding REDFLEX HOLDINGS LTD or give up 20.29% of portfolio value over 90 days.

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

Mason Graphite  vs.  REDFLEX HOLDINGS LTD

Mason Graphite

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mason Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

REDFLEX HOLDINGS LTD

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in REDFLEX HOLDINGS LTD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, REDFLEX HOLDINGS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mason Graphite and REDFLEX HOLDINGS

The main advantage of trading using opposite Mason Graphite and REDFLEX HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mason Graphite 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.

The idea behind Mason Graphite and REDFLEX HOLDINGS LTD 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.