Correlation Between REDFLEX HOLDINGS and Global Helium

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

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

Diversification Opportunities for REDFLEX HOLDINGS and Global Helium

0.37

Correlation Coefficient

REDFLEX HOLDINGS  Global Helium

Weak diversification

The 3 months correlation between REDFLEX and Global is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding REDFLEX HOLDINGS LTD and Global Helium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Helium Corp and REDFLEX HOLDINGS 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 REDFLEX HOLDINGS LTD are associated (or correlated) with Global Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Helium Corp has no effect on the direction of REDFLEX HOLDINGS i.e., REDFLEX HOLDINGS and Global Helium go up and down completely randomly.

Pair Corralation between REDFLEX HOLDINGS and Global Helium

Assuming the 90 days horizon REDFLEX HOLDINGS LTD is expected to generate 1.63 times more return on investment than Global Helium. However, REDFLEX HOLDINGS is 1.63 times more volatile than Global Helium Corp. It trades about 0.08 of its potential returns per unit of risk. Global Helium Corp is currently generating about 0.03 per unit of risk. If you would invest  3.50  in REDFLEX HOLDINGS LTD on September 2, 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

REDFLEX HOLDINGS LTD  vs.  Global Helium Corp

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 uncertain basic indicators, REDFLEX HOLDINGS reported solid returns over the last few months and may actually be approaching a breakup point.

Global Helium Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Helium Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Global Helium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with REDFLEX HOLDINGS and Global Helium

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

The idea behind REDFLEX HOLDINGS LTD and Global Helium 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.