Correlation Between Catena Media and Neometals
Can any of the company-specific risk be diversified away by investing in both Catena Media and Neometals 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 Neometals 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 Neometals, you can compare the effects of market volatilities on Catena Media and Neometals 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 Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and Neometals.
Diversification Opportunities for Catena Media and Neometals
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Catena and Neometals is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media PLC and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of Catena Media i.e., Catena Media and Neometals go up and down completely randomly.
Pair Corralation between Catena Media and Neometals
Assuming the 90 days trading horizon Catena Media PLC is expected to generate 0.93 times more return on investment than Neometals. However, Catena Media PLC is 1.07 times less risky than Neometals. It trades about -0.08 of its potential returns per unit of risk. Neometals is currently generating about -0.09 per unit of risk. If you would invest 2,082 in Catena Media PLC on August 31, 2024 and sell it today you would lose (1,643) from holding Catena Media PLC or give up 78.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Catena Media PLC vs. Neometals
Performance |
| Timeline |
| Catena Media PLC |
| Neometals |
Catena Media and Neometals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena Media and Neometals
The main advantage of trading using opposite Catena Media and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' long position.| Catena Media vs. Neometals | Catena Media vs. Coor Service Management | Catena Media vs. Aeorema Communications Plc | Catena Media vs. JLEN Environmental Assets |
| Neometals vs. Live Nation Entertainment | Neometals vs. Dalata Hotel Group | Neometals vs. Intermediate Capital Group | Neometals vs. Flutter Entertainment PLC |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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