Correlation Between IAR Systems and Catena Media
Can any of the company-specific risk be diversified away by investing in both IAR Systems and Catena 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 IAR Systems and Catena Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAR Systems Group and Catena Media plc, you can compare the effects of market volatilities on IAR Systems and Catena 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 IAR Systems with a short position of Catena Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAR Systems and Catena Media.
Diversification Opportunities for IAR Systems and Catena Media
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IAR and Catena is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding IAR Systems Group and Catena Media plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catena Media plc and IAR Systems 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 IAR Systems Group are associated (or correlated) with Catena Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catena Media plc has no effect on the direction of IAR Systems i.e., IAR Systems and Catena Media go up and down completely randomly.
Pair Corralation between IAR Systems and Catena Media
Assuming the 90 days trading horizon IAR Systems Group is expected to generate 0.61 times more return on investment than Catena Media. However, IAR Systems Group is 1.64 times less risky than Catena Media. It trades about 0.01 of its potential returns per unit of risk. Catena Media plc is currently generating about -0.06 per unit of risk. If you would invest 14,967 in IAR Systems Group on September 2, 2024 and sell it today you would lose (467.00) from holding IAR Systems Group or give up 3.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAR Systems Group vs. Catena Media plc
Performance |
| Timeline |
| IAR Systems Group |
| Catena Media plc |
IAR Systems and Catena Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAR Systems and Catena Media
The main advantage of trading using opposite IAR Systems and Catena Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAR Systems position performs unexpectedly, Catena 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 Catena Media will offset losses from the drop in Catena Media's long position.| IAR Systems vs. Catena Media plc | IAR Systems vs. Kambi Group PLC | IAR Systems vs. Betsson AB | IAR Systems vs. Invisio Communications AB |
| 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 Stocks Directory module to find actively traded stocks across global markets.
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