Correlation Between Sealed Air and REDFLEX HOLDINGS

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

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

Diversification Opportunities for Sealed Air and REDFLEX HOLDINGS

-0.28

Correlation Coefficient

Sealed Air  REDFLEX HOLDINGS

Very good diversification

The 3 months correlation between Sealed and REDFLEX is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air 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 Sealed Air 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 Sealed Air 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 Sealed Air i.e., Sealed Air and REDFLEX HOLDINGS go up and down completely randomly.

Pair Corralation between Sealed Air and REDFLEX HOLDINGS

Considering the 90-day investment horizon Sealed Air is expected to generate 11.79 times less return on investment than REDFLEX HOLDINGS. But when comparing it to its historical volatility, Sealed Air is 14.77 times less risky than REDFLEX HOLDINGS. It trades about 0.08 of its potential returns per unit of risk. REDFLEX HOLDINGS LTD is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.75  in REDFLEX HOLDINGS LTD on September 5, 2024 and sell it today you would lose (1.39) from holding REDFLEX HOLDINGS LTD or give up 37.07% of portfolio value over 90 days.

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

Sealed Air  vs.  REDFLEX HOLDINGS LTD

Sealed Air

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sealed Air are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Sealed Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

REDFLEX HOLDINGS LTD

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in REDFLEX HOLDINGS LTD are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, REDFLEX HOLDINGS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sealed Air and REDFLEX HOLDINGS

The main advantage of trading using opposite Sealed Air and REDFLEX HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air 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 Sealed Air 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.