Correlation Between Shenandoah Telecommunicatio and REDSUN PROPERTIES

Can any of the company-specific risk be diversified away by investing in both Shenandoah Telecommunicatio and REDSUN PROPERTIES 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 Shenandoah Telecommunicatio and REDSUN PROPERTIES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenandoah Telecommunications and REDSUN PROPERTIES GROUP, you can compare the effects of market volatilities on Shenandoah Telecommunicatio and REDSUN PROPERTIES 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 Shenandoah Telecommunicatio with a short position of REDSUN PROPERTIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenandoah Telecommunicatio and REDSUN PROPERTIES.

Diversification Opportunities for Shenandoah Telecommunicatio and REDSUN PROPERTIES

-0.29

Correlation Coefficient

Shenandoah Telecommunicatio  REDSUN PROPERTIES

Very good diversification

The 3 months correlation between Shenandoah and REDSUN is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and REDSUN PROPERTIES GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDSUN PROPERTIES and Shenandoah Telecommunicatio 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 Shenandoah Telecommunications are associated (or correlated) with REDSUN PROPERTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDSUN PROPERTIES has no effect on the direction of Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and REDSUN PROPERTIES go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and REDSUN PROPERTIES

Assuming the 90 days horizon Shenandoah Telecommunications is expected to under-perform the REDSUN PROPERTIES. But the stock apears to be less risky and, when comparing its historical volatility, Shenandoah Telecommunications is 7.97 times less risky than REDSUN PROPERTIES. The stock trades about -0.01 of its potential returns per unit of risk. The REDSUN PROPERTIES GROUP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.40  in REDSUN PROPERTIES GROUP on September 26, 2024 and sell it today you would lose (0.10) from holding REDSUN PROPERTIES GROUP or give up 25.0% of portfolio value over 90 days.

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

Shenandoah Telecommunications  vs.  REDSUN PROPERTIES GROUP

Shenandoah Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenandoah Telecommunications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Shenandoah Telecommunicatio is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

REDSUN PROPERTIES

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in REDSUN PROPERTIES GROUP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, REDSUN PROPERTIES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenandoah Telecommunicatio and REDSUN PROPERTIES

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

The idea behind Shenandoah Telecommunications and REDSUN PROPERTIES GROUP 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.