Correlation Between CATLIN GROUP and Aeorema Communications
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP and Aeorema Communications 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 CATLIN GROUP and Aeorema Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Aeorema Communications Plc, you can compare the effects of market volatilities on CATLIN GROUP and Aeorema Communications 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 CATLIN GROUP with a short position of Aeorema Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Aeorema Communications.
Diversification Opportunities for CATLIN GROUP and Aeorema Communications
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CATLIN and Aeorema is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and Aeorema Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeorema Communications and CATLIN GROUP 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 CATLIN GROUP are associated (or correlated) with Aeorema Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeorema Communications has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and Aeorema Communications go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Aeorema Communications
Assuming the 90 days trading horizon CATLIN GROUP is expected to under-perform the Aeorema Communications. But the stock apears to be less risky and, when comparing its historical volatility, CATLIN GROUP is 5.29 times less risky than Aeorema Communications. The stock trades about -0.22 of its potential returns per unit of risk. The Aeorema Communications Plc is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 5,450 in Aeorema Communications Plc on September 18, 2024 and sell it today you would earn a total of 550.00 from holding Aeorema Communications Plc or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CATLIN GROUP vs. Aeorema Communications Plc
Performance |
| Timeline |
| CATLIN GROUP |
| Aeorema Communications |
CATLIN GROUP and Aeorema Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Aeorema Communications
The main advantage of trading using opposite CATLIN GROUP and Aeorema Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP position performs unexpectedly, Aeorema Communications 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 Aeorema Communications will offset losses from the drop in Aeorema Communications' long position.| CATLIN GROUP vs. Catalyst Media Group | CATLIN GROUP vs. Tamburi Investment Partners | CATLIN GROUP vs. Magnora ASA | CATLIN GROUP vs. RTW Venture Fund |
| Aeorema Communications vs. Catalyst Media Group | Aeorema Communications vs. CATLIN GROUP | Aeorema Communications vs. RTW Venture Fund | Aeorema Communications vs. SANTANDER UK 10 |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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