Correlation Between Induction Healthcare and Catena Media
Can any of the company-specific risk be diversified away by investing in both Induction Healthcare 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 Induction Healthcare and Catena Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Induction Healthcare Group and Catena Media PLC, you can compare the effects of market volatilities on Induction Healthcare 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 Induction Healthcare with a short position of Catena Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Induction Healthcare and Catena Media.
Diversification Opportunities for Induction Healthcare and Catena Media
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Induction and Catena is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare 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 Induction Healthcare 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 Induction Healthcare 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 Induction Healthcare i.e., Induction Healthcare and Catena Media go up and down completely randomly.
Pair Corralation between Induction Healthcare and Catena Media
Assuming the 90 days trading horizon Induction Healthcare Group is expected to generate 0.95 times more return on investment than Catena Media. However, Induction Healthcare Group is 1.05 times less risky than Catena Media. It trades about 0.14 of its potential returns per unit of risk. Catena Media PLC is currently generating about -0.16 per unit of risk. If you would invest 825.00 in Induction Healthcare Group on September 3, 2024 and sell it today you would earn a total of 75.00 from holding Induction Healthcare Group or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Induction Healthcare Group vs. Catena Media PLC
Performance |
| Timeline |
| Induction Healthcare |
| Catena Media PLC |
Induction Healthcare and Catena Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Induction Healthcare and Catena Media
The main advantage of trading using opposite Induction Healthcare and Catena Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Induction Healthcare 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.| Induction Healthcare vs. Qurate Retail Series | Induction Healthcare vs. National Beverage Corp | Induction Healthcare vs. Livermore Investments Group | Induction Healthcare vs. Hochschild Mining plc |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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