Correlation Between Red Light and Flowr Corp

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

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

Diversification Opportunities for Red Light and Flowr Corp

0.0

Correlation Coefficient

Red Light  Flowr Corp

Pay attention - limited upside

The 3 months correlation between Red and Flowr is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Red Light Holland and Flowr Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowr Corp and Red Light 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 Light Holland are associated (or correlated) with Flowr Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowr Corp has no effect on the direction of Red Light i.e., Red Light and Flowr Corp go up and down completely randomly.

Pair Corralation between Red Light and Flowr Corp

If you would invest  2.70  in Red Light Holland on September 19, 2024 and sell it today you would earn a total of  0.00  from holding Red Light Holland or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	82.54%
Values	Daily Returns

Red Light Holland  vs.  Flowr Corp

Red Light Holland

Risk-Adjusted Performance

2 of 100

Weak

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

Flowr Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Red Light and Flowr Corp

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

The idea behind Red Light Holland and Flowr 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 Stocks Directory module to find actively traded stocks across global markets.