Correlation Between Gear4music Plc and Catalyst Media
Can any of the company-specific risk be diversified away by investing in both Gear4music Plc and Catalyst Media 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 Gear4music Plc and Catalyst Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gear4music Plc and Catalyst Media Group, you can compare the effects of market volatilities on Gear4music Plc and Catalyst Media 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 Gear4music Plc with a short position of Catalyst Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear4music Plc and Catalyst Media.
Diversification Opportunities for Gear4music Plc and Catalyst Media
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gear4music and Catalyst is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gear4music Plc and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media Group and Gear4music Plc 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 Gear4music Plc are associated (or correlated) with Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of Gear4music Plc i.e., Gear4music Plc and Catalyst Media go up and down completely randomly.
Pair Corralation between Gear4music Plc and Catalyst Media
Assuming the 90 days trading horizon Gear4music Plc is expected to generate 1.89 times more return on investment than Catalyst Media. However, Gear4music Plc is 1.89 times more volatile than Catalyst Media Group. It trades about 0.04 of its potential returns per unit of risk. Catalyst Media Group is currently generating about -0.05 per unit of risk. If you would invest 10,750 in Gear4music Plc on October 12, 2024 and sell it today you would earn a total of 5,000 from holding Gear4music Plc or generate 46.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gear4music Plc vs. Catalyst Media Group
Performance |
| Timeline |
| Gear4music Plc |
| Catalyst Media Group |
Gear4music Plc and Catalyst Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gear4music Plc and Catalyst Media
The main advantage of trading using opposite Gear4music Plc and Catalyst Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear4music Plc position performs unexpectedly, Catalyst Media 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 Media will offset losses from the drop in Catalyst Media's long position.| Gear4music Plc vs. Tungsten West PLC | Gear4music Plc vs. Argo Group Limited | Gear4music Plc vs. Versarien PLC | Gear4music Plc vs. Quantum Blockchain Technologies |
| Catalyst Media vs. Gear4music Plc | Catalyst Media vs. Arrow Electronics | Catalyst Media vs. STMicroelectronics NV | Catalyst Media vs. Electronic Arts |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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