Correlation Between Catena Media and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both Catena Media and Nexam Chemical 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 Nexam Chemical 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 Nexam Chemical Holding, you can compare the effects of market volatilities on Catena Media and Nexam Chemical 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 Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and Nexam Chemical.
Diversification Opportunities for Catena Media and Nexam Chemical
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Catena and Nexam is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media plc and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding 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 Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of Catena Media i.e., Catena Media and Nexam Chemical go up and down completely randomly.
Pair Corralation between Catena Media and Nexam Chemical
Assuming the 90 days trading horizon Catena Media plc is expected to under-perform the Nexam Chemical. In addition to that, Catena Media is 2.12 times more volatile than Nexam Chemical Holding. It trades about -0.17 of its total potential returns per unit of risk. Nexam Chemical Holding is currently generating about -0.02 per unit of volatility. If you would invest 406.00 in Nexam Chemical Holding on September 1, 2024 and sell it today you would lose (7.00) from holding Nexam Chemical Holding or give up 1.72% 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. Nexam Chemical Holding
Performance |
| Timeline |
| Catena Media plc |
| Nexam Chemical Holding |
Catena Media and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena Media and Nexam Chemical
The main advantage of trading using opposite Catena Media and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical's long position.| Catena Media vs. Betsson AB | Catena Media vs. Kambi Group PLC | Catena Media vs. Better Collective | Catena Media vs. Evolution AB |
| Nexam Chemical vs. Holmen AB | Nexam Chemical vs. Svenska Cellulosa Aktiebolaget | Nexam Chemical vs. Husqvarna AB | Nexam Chemical vs. Alfa Laval AB |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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