Correlation Between Catalyst Media and Aeorema Communications
Can any of the company-specific risk be diversified away by investing in both Catalyst Media 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 Catalyst Media and Aeorema Communications 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 Aeorema Communications Plc, you can compare the effects of market volatilities on Catalyst Media 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 Catalyst Media with a short position of Aeorema Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and Aeorema Communications.
Diversification Opportunities for Catalyst Media and Aeorema Communications
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Catalyst and Aeorema is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media 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 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 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 Catalyst Media i.e., Catalyst Media and Aeorema Communications go up and down completely randomly.
Pair Corralation between Catalyst Media and Aeorema Communications
Assuming the 90 days trading horizon Catalyst Media Group is expected to generate 0.7 times more return on investment than Aeorema Communications. However, Catalyst Media Group is 1.44 times less risky than Aeorema Communications. It trades about 0.01 of its potential returns per unit of risk. Aeorema Communications Plc is currently generating about -0.01 per unit of risk. If you would invest 9,680 in Catalyst Media Group on August 26, 2024 and sell it today you would lose (30.00) from holding Catalyst Media Group or give up 0.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Media Group vs. Aeorema Communications Plc
Performance |
| Timeline |
| Catalyst Media Group |
| Aeorema Communications |
Catalyst Media and Aeorema Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Media and Aeorema Communications
The main advantage of trading using opposite Catalyst Media and Aeorema Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Media 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.| Catalyst Media vs. Toyota Motor Corp | Catalyst Media vs. SoftBank Group Corp | Catalyst Media vs. Fannie Mae | Catalyst Media vs. Panasonic Corp |
| Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Hyundai Motor | Aeorema Communications vs. Toyota Motor Corp |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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