Correlation Between Red Oak and Catalystmap Global

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

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

Diversification Opportunities for Red Oak and Catalystmap Global

0.95

Correlation Coefficient

Red Oak  Catalystmap Global

Almost no diversification

The 3 months correlation between Red and Catalystmap is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology and Catalystmap Global Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmap Global and Red Oak 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 Oak Technology are associated (or correlated) with Catalystmap Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmap Global has no effect on the direction of Red Oak i.e., Red Oak and Catalystmap Global go up and down completely randomly.

Pair Corralation between Red Oak and Catalystmap Global

Assuming the 90 days horizon Red Oak Technology is expected to generate 2.7 times more return on investment than Catalystmap Global. However, Red Oak is 2.7 times more volatile than Catalystmap Global Balanced. It trades about 0.3 of its potential returns per unit of risk. Catalystmap Global Balanced is currently generating about 0.19 per unit of risk. If you would invest  4,613  in Red Oak Technology on May 10, 2025 and sell it today you would earn a total of  793.00  from holding Red Oak Technology or generate 17.19% return on investment over 90 days.

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

Red Oak Technology  vs.  Catalystmap Global Balanced

Red Oak Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Red Oak Technology are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Red Oak showed solid returns over the last few months and may actually be approaching a breakup point.

Catalystmap Global

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmap Global Balanced are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Catalystmap Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Red Oak and Catalystmap Global

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

The idea behind Red Oak Technology and Catalystmap Global Balanced 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.