Correlation Between Catena Media and XXL ASA
Can any of the company-specific risk be diversified away by investing in both Catena Media and XXL ASA 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 XXL ASA 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 XXL ASA, you can compare the effects of market volatilities on Catena Media and XXL ASA 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 XXL ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and XXL ASA.
Diversification Opportunities for Catena Media and XXL ASA
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Catena and XXL is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media plc and XXL ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XXL ASA 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 XXL ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XXL ASA has no effect on the direction of Catena Media i.e., Catena Media and XXL ASA go up and down completely randomly.
Pair Corralation between Catena Media and XXL ASA
Assuming the 90 days trading horizon Catena Media plc is expected to under-perform the XXL ASA. But the stock apears to be less risky and, when comparing its historical volatility, Catena Media plc is 1.53 times less risky than XXL ASA. The stock trades about -0.09 of its potential returns per unit of risk. The XXL ASA is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 8,895 in XXL ASA on August 29, 2024 and sell it today you would lose (8,117) from holding XXL ASA or give up 91.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.75% |
| Values | Daily Returns |
Catena Media plc vs. XXL ASA
Performance |
| Timeline |
| Catena Media plc |
| XXL ASA |
Catena Media and XXL ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena Media and XXL ASA
The main advantage of trading using opposite Catena Media and XXL ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media position performs unexpectedly, XXL ASA 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 XXL ASA will offset losses from the drop in XXL ASA's long position.| Catena Media vs. Betsson AB | Catena Media vs. Kambi Group PLC | Catena Media vs. Better Collective | Catena Media vs. Evolution 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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