Correlation Between Catalyst Media and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Catalyst Media and Gamma 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 Gamma 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 Gamma Communications PLC, you can compare the effects of market volatilities on Catalyst Media and Gamma 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 Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and Gamma Communications.
Diversification Opportunities for Catalyst Media and Gamma Communications
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Catalyst and Gamma is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications PLC 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 Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of Catalyst Media i.e., Catalyst Media and Gamma Communications go up and down completely randomly.
Pair Corralation between Catalyst Media and Gamma Communications
Assuming the 90 days trading horizon Catalyst Media is expected to generate 3.64 times less return on investment than Gamma Communications. But when comparing it to its historical volatility, Catalyst Media Group is 1.27 times less risky than Gamma Communications. It trades about 0.02 of its potential returns per unit of risk. Gamma Communications PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 144,846 in Gamma Communications PLC on September 13, 2024 and sell it today you would earn a total of 19,554 from holding Gamma Communications PLC or generate 13.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Media Group vs. Gamma Communications PLC
Performance |
| Timeline |
| Catalyst Media Group |
| Gamma Communications PLC |
Catalyst Media and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Media and Gamma Communications
The main advantage of trading using opposite Catalyst Media and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Media position performs unexpectedly, Gamma 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| Catalyst Media vs. Zanaga Iron Ore | Catalyst Media vs. Alior Bank SA | Catalyst Media vs. Symphony Environmental Technologies | Catalyst Media vs. Ironveld Plc |
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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