Correlation Between Red Cat and SatixFy Communications

Can any of the company-specific risk be diversified away by investing in both Red Cat and SatixFy Communications 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 Cat and SatixFy Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Red Cat Holdings and SatixFy Communications, you can compare the effects of market volatilities on Red Cat and SatixFy Communications 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 Cat with a short position of SatixFy Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and SatixFy Communications.

Diversification Opportunities for Red Cat and SatixFy Communications

0.65

Correlation Coefficient

Red Cat  SatixFy Communications

Poor diversification

The 3 months correlation between Red and SatixFy is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and SatixFy Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SatixFy Communications and Red Cat 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 Cat Holdings are associated (or correlated) with SatixFy Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SatixFy Communications has no effect on the direction of Red Cat i.e., Red Cat and SatixFy Communications go up and down completely randomly.

Pair Corralation between Red Cat and SatixFy Communications

Given the investment horizon of 90 days Red Cat Holdings is expected to generate 0.91 times more return on investment than SatixFy Communications. However, Red Cat Holdings is 1.1 times less risky than SatixFy Communications. It trades about 0.1 of its potential returns per unit of risk. SatixFy Communications is currently generating about -0.01 per unit of risk. If you would invest  92.00  in Red Cat Holdings on September 19, 2024 and sell it today you would earn a total of  875.00  from holding Red Cat Holdings or generate 951.09% return on investment over 90 days.

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

Red Cat Holdings  vs.  SatixFy Communications

Red Cat Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Red Cat Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Red Cat unveiled solid returns over the last few months and may actually be approaching a breakup point.

SatixFy Communications

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SatixFy Communications are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SatixFy Communications showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Red Cat and SatixFy Communications

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

The idea behind Red Cat Holdings and SatixFy Communications 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.