Correlation Between Catcher Technology and Chernan Metal
Can any of the company-specific risk be diversified away by investing in both Catcher Technology and Chernan Metal 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 Catcher Technology and Chernan Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catcher Technology Co and Chernan Metal Industrial, you can compare the effects of market volatilities on Catcher Technology and Chernan Metal 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 Catcher Technology with a short position of Chernan Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catcher Technology and Chernan Metal.
Diversification Opportunities for Catcher Technology and Chernan Metal
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Catcher and Chernan is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Catcher Technology Co and Chernan Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chernan Metal Industrial and Catcher Technology 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 Catcher Technology Co are associated (or correlated) with Chernan Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chernan Metal Industrial has no effect on the direction of Catcher Technology i.e., Catcher Technology and Chernan Metal go up and down completely randomly.
Pair Corralation between Catcher Technology and Chernan Metal
Assuming the 90 days trading horizon Catcher Technology Co is expected to under-perform the Chernan Metal. But the stock apears to be less risky and, when comparing its historical volatility, Catcher Technology Co is 1.25 times less risky than Chernan Metal. The stock trades about -0.35 of its potential returns per unit of risk. The Chernan Metal Industrial is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 4,465 in Chernan Metal Industrial on August 24, 2024 and sell it today you would lose (315.00) from holding Chernan Metal Industrial or give up 7.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catcher Technology Co vs. Chernan Metal Industrial
Performance |
| Timeline |
| Catcher Technology |
| Chernan Metal Industrial |
Catcher Technology and Chernan Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catcher Technology and Chernan Metal
The main advantage of trading using opposite Catcher Technology and Chernan Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catcher Technology position performs unexpectedly, Chernan Metal 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 Chernan Metal will offset losses from the drop in Chernan Metal's long position.The idea behind Catcher Technology Co and Chernan Metal Industrial 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.| Chernan Metal vs. Catcher Technology Co | Chernan Metal vs. Solar Applied Materials | Chernan Metal vs. Evergreen Steel Corp | Chernan Metal vs. Shin Zu Shing |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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