Correlation Between RedStone and BLZ

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

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

Diversification Opportunities for RedStone and BLZ

0.8

Correlation Coefficient

RedStone  BLZ

Very poor diversification

The 3 months correlation between RedStone and BLZ is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding RedStone and BLZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLZ and RedStone 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 RedStone are associated (or correlated) with BLZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLZ has no effect on the direction of RedStone i.e., RedStone and BLZ go up and down completely randomly.

Pair Corralation between RedStone and BLZ

Assuming the 90 days trading horizon RedStone is expected to under-perform the BLZ. In addition to that, RedStone is 1.36 times more volatile than BLZ. It trades about -0.01 of its total potential returns per unit of risk. BLZ is currently generating about 0.04 per unit of volatility. If you would invest  3.52  in BLZ on April 23, 2025 and sell it today you would earn a total of  0.19  from holding BLZ or generate 5.4% return on investment over 90 days.

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

RedStone  vs.  BLZ

RedStone

Risk-Adjusted Performance

Very Weak

Over the last 90 days RedStone has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, RedStone is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

BLZ

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BLZ are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, BLZ may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with RedStone and BLZ

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

The idea behind RedStone and BLZ 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.

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.