Correlation Between Aeorema Communications and Catalyst Media
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications 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 Aeorema Communications and Catalyst Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeorema Communications Plc and Catalyst Media Group, you can compare the effects of market volatilities on Aeorema Communications 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 Aeorema Communications with a short position of Catalyst Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Catalyst Media.
Diversification Opportunities for Aeorema Communications and Catalyst Media
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aeorema and Catalyst is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc 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 Aeorema Communications 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 Aeorema Communications Plc 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 Aeorema Communications i.e., Aeorema Communications and Catalyst Media go up and down completely randomly.
Pair Corralation between Aeorema Communications and Catalyst Media
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to under-perform the Catalyst Media. But the stock apears to be less risky and, when comparing its historical volatility, Aeorema Communications Plc is 1.24 times less risky than Catalyst Media. The stock trades about -0.05 of its potential returns per unit of risk. The Catalyst Media Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 7,150 in Catalyst Media Group on August 29, 2024 and sell it today you would earn a total of 1,850 from holding Catalyst Media Group or generate 25.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. Catalyst Media Group
Performance |
| Timeline |
| Aeorema Communications |
| Catalyst Media Group |
Aeorema Communications and Catalyst Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Catalyst Media
The main advantage of trading using opposite Aeorema Communications and Catalyst Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications 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.| Aeorema Communications vs. Walmart | Aeorema Communications vs. BYD Co | Aeorema Communications vs. Volkswagen AG | Aeorema Communications vs. Volkswagen AG Non Vtg |
| Catalyst Media vs. Walmart | Catalyst Media vs. BYD Co | Catalyst Media vs. Volkswagen AG | Catalyst Media vs. Volkswagen AG Non Vtg |
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 Stocks Directory module to find actively traded stocks across global markets.
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