Correlation Between Catalyst Media and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Catalyst Media and STMicroelectronics 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 Catalyst Media and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalyst Media Group and STMicroelectronics NV, you can compare the effects of market volatilities on Catalyst Media and STMicroelectronics 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 Catalyst Media with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and STMicroelectronics.
Diversification Opportunities for Catalyst Media and STMicroelectronics
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Catalyst and STMicroelectronics is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Catalyst 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 Catalyst Media Group are associated (or correlated) with STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of Catalyst Media i.e., Catalyst Media and STMicroelectronics go up and down completely randomly.
Pair Corralation between Catalyst Media and STMicroelectronics
Assuming the 90 days trading horizon Catalyst Media Group is expected to under-perform the STMicroelectronics. But the stock apears to be less risky and, when comparing its historical volatility, Catalyst Media Group is 1.07 times less risky than STMicroelectronics. The stock trades about -0.41 of its potential returns per unit of risk. The STMicroelectronics NV is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,547 in STMicroelectronics NV on September 12, 2024 and sell it today you would lose (53.00) from holding STMicroelectronics NV or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Catalyst Media Group vs. STMicroelectronics NV
Performance |
| Timeline |
| Catalyst Media Group |
| STMicroelectronics |
Catalyst Media and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Media and STMicroelectronics
The main advantage of trading using opposite Catalyst Media and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Media position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| Catalyst Media vs. Charter Communications Cl | Catalyst Media vs. Cairo Communication SpA | Catalyst Media vs. Gamma Communications PLC | Catalyst Media vs. Lowland Investment Co |
| STMicroelectronics vs. Gamma Communications PLC | STMicroelectronics vs. Panther Metals PLC | STMicroelectronics vs. Batm Advanced Communications | STMicroelectronics vs. Anglesey Mining |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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