Correlation Between Flowtech Fluidpower and CATLIN GROUP
Can any of the company-specific risk be diversified away by investing in both Flowtech Fluidpower 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 Flowtech Fluidpower and CATLIN GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowtech Fluidpower plc and CATLIN GROUP , you can compare the effects of market volatilities on Flowtech Fluidpower 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 Flowtech Fluidpower with a short position of CATLIN GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowtech Fluidpower and CATLIN GROUP.
Diversification Opportunities for Flowtech Fluidpower and CATLIN GROUP
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Flowtech and CATLIN is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Flowtech Fluidpower plc and CATLIN GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATLIN GROUP and Flowtech Fluidpower 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 Flowtech Fluidpower plc 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 Flowtech Fluidpower i.e., Flowtech Fluidpower and CATLIN GROUP go up and down completely randomly.
Pair Corralation between Flowtech Fluidpower and CATLIN GROUP
Assuming the 90 days trading horizon Flowtech Fluidpower plc is expected to under-perform the CATLIN GROUP. In addition to that, Flowtech Fluidpower is 3.4 times more volatile than CATLIN GROUP . It trades about -0.13 of its total potential returns per unit of risk. CATLIN GROUP is currently generating about -0.11 per unit of volatility. If you would invest 10,100 in CATLIN GROUP on September 3, 2024 and sell it today you would lose (700.00) from holding CATLIN GROUP or give up 6.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowtech Fluidpower plc vs. CATLIN GROUP
Performance |
| Timeline |
| Flowtech Fluidpower plc |
| CATLIN GROUP |
Flowtech Fluidpower and CATLIN GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowtech Fluidpower and CATLIN GROUP
The main advantage of trading using opposite Flowtech Fluidpower and CATLIN GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowtech Fluidpower 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.| Flowtech Fluidpower vs. Catalyst Media Group | Flowtech Fluidpower vs. CATLIN GROUP | Flowtech Fluidpower vs. Magnora ASA | Flowtech Fluidpower vs. RTW Venture Fund |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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