Correlation Between Tomra Systems and Catalyst Media
Can any of the company-specific risk be diversified away by investing in both Tomra Systems and Catalyst Media 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 Tomra Systems and Catalyst Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tomra Systems ASA and Catalyst Media Group, you can compare the effects of market volatilities on Tomra Systems and Catalyst Media 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 Tomra Systems with a short position of Catalyst Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tomra Systems and Catalyst Media.
Diversification Opportunities for Tomra Systems and Catalyst Media
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tomra and Catalyst is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tomra Systems ASA and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media Group and Tomra Systems 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 Tomra Systems ASA are associated (or correlated) with Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of Tomra Systems i.e., Tomra Systems and Catalyst Media go up and down completely randomly.
Pair Corralation between Tomra Systems and Catalyst Media
Assuming the 90 days trading horizon Tomra Systems ASA is expected to generate 1.55 times more return on investment than Catalyst Media. However, Tomra Systems is 1.55 times more volatile than Catalyst Media Group. It trades about 0.01 of its potential returns per unit of risk. Catalyst Media Group is currently generating about -0.41 per unit of risk. If you would invest 15,860 in Tomra Systems ASA on September 4, 2024 and sell it today you would lose (50.00) from holding Tomra Systems ASA or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tomra Systems ASA vs. Catalyst Media Group
Performance |
| Timeline |
| Tomra Systems ASA |
| Catalyst Media Group |
Tomra Systems and Catalyst Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tomra Systems and Catalyst Media
The main advantage of trading using opposite Tomra Systems and Catalyst Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tomra Systems position performs unexpectedly, Catalyst Media 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 Catalyst Media will offset losses from the drop in Catalyst Media's long position.| Tomra Systems vs. Samsung Electronics Co | Tomra Systems vs. Samsung Electronics Co | Tomra Systems vs. Hyundai Motor | Tomra Systems vs. Toyota Motor Corp |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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