Correlation Between Catena Media and Gaming Innovation
Can any of the company-specific risk be diversified away by investing in both Catena Media and Gaming Innovation 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 Media and Gaming Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catena Media plc and Gaming Innovation Group, you can compare the effects of market volatilities on Catena Media and Gaming Innovation 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 Media with a short position of Gaming Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and Gaming Innovation.
Diversification Opportunities for Catena Media and Gaming Innovation
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Catena and Gaming is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media plc and Gaming Innovation Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Innovation and Catena 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 Catena Media plc are associated (or correlated) with Gaming Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Innovation has no effect on the direction of Catena Media i.e., Catena Media and Gaming Innovation go up and down completely randomly.
Pair Corralation between Catena Media and Gaming Innovation
Assuming the 90 days trading horizon Catena Media plc is expected to under-perform the Gaming Innovation. In addition to that, Catena Media is 2.63 times more volatile than Gaming Innovation Group. It trades about -0.11 of its total potential returns per unit of risk. Gaming Innovation Group is currently generating about -0.01 per unit of volatility. If you would invest 2,495 in Gaming Innovation Group on August 28, 2024 and sell it today you would lose (25.00) from holding Gaming Innovation Group or give up 1.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catena Media plc vs. Gaming Innovation Group
Performance |
| Timeline |
| Catena Media plc |
| Gaming Innovation |
Catena Media and Gaming Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena Media and Gaming Innovation
The main advantage of trading using opposite Catena Media and Gaming Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media position performs unexpectedly, Gaming Innovation 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 Gaming Innovation will offset losses from the drop in Gaming Innovation's long position.| Catena Media vs. Betsson AB | Catena Media vs. Kambi Group PLC | Catena Media vs. Better Collective | Catena Media vs. Evolution AB |
| Gaming Innovation vs. Catena Media plc | Gaming Innovation vs. Idex ASA | Gaming Innovation vs. XXL ASA | Gaming Innovation vs. Kitron ASA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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