Correlation Between Catena Media and Induction Healthcare
Can any of the company-specific risk be diversified away by investing in both Catena Media and Induction Healthcare 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 Catena Media and Induction Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catena Media PLC and Induction Healthcare Group, you can compare the effects of market volatilities on Catena Media and Induction Healthcare 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 Catena Media with a short position of Induction Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and Induction Healthcare.
Diversification Opportunities for Catena Media and Induction Healthcare
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Catena and Induction is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media PLC and Induction Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Induction Healthcare and Catena Media 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 Catena Media PLC are associated (or correlated) with Induction Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Induction Healthcare has no effect on the direction of Catena Media i.e., Catena Media and Induction Healthcare go up and down completely randomly.
Pair Corralation between Catena Media and Induction Healthcare
Assuming the 90 days trading horizon Catena Media PLC is expected to under-perform the Induction Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Catena Media PLC is 1.3 times less risky than Induction Healthcare. The stock trades about -0.17 of its potential returns per unit of risk. The Induction Healthcare Group is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 700.00 in Induction Healthcare Group on August 25, 2024 and sell it today you would earn a total of 200.00 from holding Induction Healthcare Group or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Catena Media PLC vs. Induction Healthcare Group
Performance |
| Timeline |
| Catena Media PLC |
| Induction Healthcare |
Catena Media and Induction Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena Media and Induction Healthcare
The main advantage of trading using opposite Catena Media and Induction Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media position performs unexpectedly, Induction Healthcare 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 Induction Healthcare will offset losses from the drop in Induction Healthcare's long position.| Catena Media vs. Samsung Electronics Co | Catena Media vs. Samsung Electronics Co | Catena Media vs. Hyundai Motor | Catena Media 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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