Correlation Between Energy Technologies and Catalyst Metals
Can any of the company-specific risk be diversified away by investing in both Energy Technologies and Catalyst Metals 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 Energy Technologies and Catalyst Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Technologies Limited and Catalyst Metals, you can compare the effects of market volatilities on Energy Technologies and Catalyst Metals 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 Energy Technologies with a short position of Catalyst Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Technologies and Catalyst Metals.
Diversification Opportunities for Energy Technologies and Catalyst Metals
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Energy and Catalyst is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Energy Technologies Limited and Catalyst Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Metals and Energy Technologies 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 Energy Technologies Limited are associated (or correlated) with Catalyst Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Metals has no effect on the direction of Energy Technologies i.e., Energy Technologies and Catalyst Metals go up and down completely randomly.
Pair Corralation between Energy Technologies and Catalyst Metals
Assuming the 90 days trading horizon Energy Technologies Limited is expected to under-perform the Catalyst Metals. But the stock apears to be less risky and, when comparing its historical volatility, Energy Technologies Limited is 1.74 times less risky than Catalyst Metals. The stock trades about -0.09 of its potential returns per unit of risk. The Catalyst Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 283.00 in Catalyst Metals on August 25, 2024 and sell it today you would earn a total of 41.00 from holding Catalyst Metals or generate 14.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Technologies Limited vs. Catalyst Metals
Performance |
| Timeline |
| Energy Technologies |
| Catalyst Metals |
Energy Technologies and Catalyst Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Technologies and Catalyst Metals
The main advantage of trading using opposite Energy Technologies and Catalyst Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Technologies position performs unexpectedly, Catalyst Metals 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 Catalyst Metals will offset losses from the drop in Catalyst Metals' long position.| Energy Technologies vs. Alto Metals | Energy Technologies vs. Aurelia Metals | Energy Technologies vs. Bluescope Steel | Energy Technologies vs. Hotel Property Investments |
| Catalyst Metals vs. Pinnacle Investment Management | Catalyst Metals vs. TPG Telecom | Catalyst Metals vs. Readytech Holdings | Catalyst Metals vs. Energy Technologies Limited |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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