Correlation Between Zegona Communications and CATLIN GROUP
Can any of the company-specific risk be diversified away by investing in both Zegona Communications 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 Zegona Communications and CATLIN GROUP 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 CATLIN GROUP , you can compare the effects of market volatilities on Zegona Communications 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 Zegona Communications with a short position of CATLIN GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and CATLIN GROUP.
Diversification Opportunities for Zegona Communications and CATLIN GROUP
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zegona and CATLIN is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and CATLIN GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATLIN GROUP 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 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 Zegona Communications i.e., Zegona Communications and CATLIN GROUP go up and down completely randomly.
Pair Corralation between Zegona Communications and CATLIN GROUP
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 11.49 times more return on investment than CATLIN GROUP. However, Zegona Communications is 11.49 times more volatile than CATLIN GROUP . It trades about 0.05 of its potential returns per unit of risk. CATLIN GROUP is currently generating about 0.03 per unit of risk. If you would invest 7,750 in Zegona Communications Plc on September 3, 2024 and sell it today you would earn a total of 27,450 from holding Zegona Communications Plc or generate 354.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.48% |
| Values | Daily Returns |
Zegona Communications Plc vs. CATLIN GROUP
Performance |
| Timeline |
| Zegona Communications Plc |
| CATLIN GROUP |
Zegona Communications and CATLIN GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and CATLIN GROUP
The main advantage of trading using opposite Zegona Communications and CATLIN GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications 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.| Zegona Communications vs. CleanTech Lithium plc | Zegona Communications vs. Diversified Energy | Zegona Communications vs. Bankers Investment Trust | Zegona Communications vs. Mindflair Plc |
| CATLIN GROUP vs. Molson Coors Beverage | CATLIN GROUP vs. Flowtech Fluidpower plc | CATLIN GROUP vs. CleanTech Lithium plc | CATLIN GROUP vs. Monster Beverage Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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