Correlation Between Ceres Power and CATLIN GROUP
Can any of the company-specific risk be diversified away by investing in both Ceres Power and CATLIN GROUP 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 Ceres Power and CATLIN GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ceres Power Holdings and CATLIN GROUP , you can compare the effects of market volatilities on Ceres Power and CATLIN GROUP 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 Ceres Power with a short position of CATLIN GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceres Power and CATLIN GROUP.
Diversification Opportunities for Ceres Power and CATLIN GROUP
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ceres and CATLIN is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ceres Power Holdings and CATLIN GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATLIN GROUP and Ceres Power 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 Ceres Power Holdings are associated (or correlated) with CATLIN GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CATLIN GROUP has no effect on the direction of Ceres Power i.e., Ceres Power and CATLIN GROUP go up and down completely randomly.
Pair Corralation between Ceres Power and CATLIN GROUP
Assuming the 90 days trading horizon Ceres Power Holdings is expected to generate 5.6 times more return on investment than CATLIN GROUP. However, Ceres Power is 5.6 times more volatile than CATLIN GROUP . It trades about -0.01 of its potential returns per unit of risk. CATLIN GROUP is currently generating about -0.12 per unit of risk. If you would invest 18,700 in Ceres Power Holdings on September 12, 2024 and sell it today you would lose (1,540) from holding Ceres Power Holdings or give up 8.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Ceres Power Holdings vs. CATLIN GROUP
Performance |
| Timeline |
| Ceres Power Holdings |
| CATLIN GROUP |
Ceres Power and CATLIN GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ceres Power and CATLIN GROUP
The main advantage of trading using opposite Ceres Power and CATLIN GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceres Power position performs unexpectedly, CATLIN GROUP 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 CATLIN GROUP will offset losses from the drop in CATLIN GROUP's long position.| Ceres Power vs. Anglesey Mining | Ceres Power vs. Sabre Insurance Group | Ceres Power vs. Endeavour Mining Corp | Ceres Power vs. United Utilities Group |
| CATLIN GROUP vs. EVS Broadcast Equipment | CATLIN GROUP vs. Ironveld Plc | CATLIN GROUP vs. Broadcom | CATLIN GROUP vs. International Biotechnology Trust |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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