Correlation Between Red Moon and Pan Global

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

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

Diversification Opportunities for Red Moon and Pan Global

0.87

Correlation Coefficient

Red Moon  Pan Global

Very poor diversification

The 3 months correlation between Red and Pan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Red Moon Resources and Pan Global Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Global Resources and Red Moon 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 Moon Resources are associated (or correlated) with Pan Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Global Resources has no effect on the direction of Red Moon i.e., Red Moon and Pan Global go up and down completely randomly.

Pair Corralation between Red Moon and Pan Global

Assuming the 90 days horizon Red Moon Resources is expected to generate 0.56 times more return on investment than Pan Global. However, Red Moon Resources is 1.79 times less risky than Pan Global. It trades about -0.08 of its potential returns per unit of risk. Pan Global Resources is currently generating about -0.07 per unit of risk. If you would invest  51.00  in Red Moon Resources on September 13, 2024 and sell it today you would lose (6.00) from holding Red Moon Resources or give up 11.76% of portfolio value over 90 days.

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

Red Moon Resources  vs.  Pan Global Resources

Red Moon Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Red Moon Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pan Global Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pan Global Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Red Moon and Pan Global

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

The idea behind Red Moon Resources and Pan Global Resources 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.

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 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.