Correlation Between Catena AB and Mendus AB
Can any of the company-specific risk be diversified away by investing in both Catena AB and Mendus AB 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 AB and Mendus AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catena AB and Mendus AB, you can compare the effects of market volatilities on Catena AB and Mendus AB 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 AB with a short position of Mendus AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena AB and Mendus AB.
Diversification Opportunities for Catena AB and Mendus AB
Pay attention - limited upside
The 3 months correlation between Catena and Mendus is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Catena AB and Mendus AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mendus AB and Catena AB 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 AB are associated (or correlated) with Mendus AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mendus AB has no effect on the direction of Catena AB i.e., Catena AB and Mendus AB go up and down completely randomly.
Pair Corralation between Catena AB and Mendus AB
Assuming the 90 days trading horizon Catena AB is expected to generate 0.31 times more return on investment than Mendus AB. However, Catena AB is 3.25 times less risky than Mendus AB. It trades about 0.04 of its potential returns per unit of risk. Mendus AB is currently generating about -0.03 per unit of risk. If you would invest 37,880 in Catena AB on August 25, 2024 and sell it today you would earn a total of 10,820 from holding Catena AB or generate 28.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catena AB vs. Mendus AB
Performance |
| Timeline |
| Catena AB |
| Mendus AB |
Catena AB and Mendus AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena AB and Mendus AB
The main advantage of trading using opposite Catena AB and Mendus AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena AB position performs unexpectedly, Mendus AB 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 Mendus AB will offset losses from the drop in Mendus AB's long position.| Catena AB vs. Fastighets AB Balder | Catena AB vs. Fabege AB | Catena AB vs. Wihlborgs Fastigheter AB | Catena AB vs. AB Sagax |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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