Correlation Between Zegona Communications and Catena Media
Can any of the company-specific risk be diversified away by investing in both Zegona Communications 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 Zegona Communications and Catena Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and Catena Media PLC, you can compare the effects of market volatilities on Zegona Communications 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 Zegona Communications with a short position of Catena Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and Catena Media.
Diversification Opportunities for Zegona Communications and Catena Media
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zegona and Catena is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc 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 Zegona Communications 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 Zegona Communications Plc 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 Zegona Communications i.e., Zegona Communications and Catena Media go up and down completely randomly.
Pair Corralation between Zegona Communications and Catena Media
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 0.73 times more return on investment than Catena Media. However, Zegona Communications Plc is 1.38 times less risky than Catena Media. It trades about 0.11 of its potential returns per unit of risk. Catena Media PLC is currently generating about -0.22 per unit of risk. If you would invest 32,800 in Zegona Communications Plc on September 2, 2024 and sell it today you would earn a total of 2,000 from holding Zegona Communications Plc or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zegona Communications Plc vs. Catena Media PLC
Performance |
| Timeline |
| Zegona Communications Plc |
| Catena Media PLC |
Zegona Communications and Catena Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and Catena Media
The main advantage of trading using opposite Zegona Communications and Catena Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications 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.| Zegona Communications vs. Samsung Electronics Co | Zegona Communications vs. Samsung Electronics Co | Zegona Communications vs. Hyundai Motor | Zegona Communications vs. Toyota Motor Corp |
| Catena Media vs. Uniper SE | Catena Media vs. Mulberry Group PLC | Catena Media vs. London Security Plc | Catena Media vs. Triad Group PLC |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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