Correlation Between Catena Media and Neola Medical
Can any of the company-specific risk be diversified away by investing in both Catena Media and Neola Medical 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 Neola Medical 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 Neola Medical AB, you can compare the effects of market volatilities on Catena Media and Neola Medical 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 Neola Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and Neola Medical.
Diversification Opportunities for Catena Media and Neola Medical
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Catena and Neola is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media plc and Neola Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neola Medical AB 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 Neola Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neola Medical AB has no effect on the direction of Catena Media i.e., Catena Media and Neola Medical go up and down completely randomly.
Pair Corralation between Catena Media and Neola Medical
Assuming the 90 days trading horizon Catena Media plc is expected to under-perform the Neola Medical. But the stock apears to be less risky and, when comparing its historical volatility, Catena Media plc is 1.04 times less risky than Neola Medical. The stock trades about -0.19 of its potential returns per unit of risk. The Neola Medical AB is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 292.00 in Neola Medical AB on August 29, 2024 and sell it today you would lose (20.00) from holding Neola Medical AB or give up 6.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catena Media plc vs. Neola Medical AB
Performance |
| Timeline |
| Catena Media plc |
| Neola Medical AB |
Catena Media and Neola Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena Media and Neola Medical
The main advantage of trading using opposite Catena Media and Neola Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media position performs unexpectedly, Neola Medical 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 Neola Medical will offset losses from the drop in Neola Medical's long position.| Catena Media vs. Betsson AB | Catena Media vs. Kambi Group PLC | Catena Media vs. Better Collective | Catena Media vs. Evolution AB |
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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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