Correlation Between Catena Media and Synthomer Plc
Can any of the company-specific risk be diversified away by investing in both Catena Media and Synthomer Plc 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 Catena Media and Synthomer Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catena Media PLC and Synthomer plc, you can compare the effects of market volatilities on Catena Media and Synthomer Plc 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 Catena Media with a short position of Synthomer Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and Synthomer Plc.
Diversification Opportunities for Catena Media and Synthomer Plc
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Catena and Synthomer is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media PLC and Synthomer plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthomer plc and Catena Media 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 Catena Media PLC are associated (or correlated) with Synthomer Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synthomer plc has no effect on the direction of Catena Media i.e., Catena Media and Synthomer Plc go up and down completely randomly.
Pair Corralation between Catena Media and Synthomer Plc
Assuming the 90 days trading horizon Catena Media PLC is expected to generate 1.6 times more return on investment than Synthomer Plc. However, Catena Media is 1.6 times more volatile than Synthomer plc. It trades about -0.08 of its potential returns per unit of risk. Synthomer plc is currently generating about -0.14 per unit of risk. If you would invest 725.00 in Catena Media PLC on October 7, 2024 and sell it today you would lose (322.00) from holding Catena Media PLC or give up 44.41% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Catena Media PLC vs. Synthomer plc
Performance |
Timeline |
Catena Media PLC |
Synthomer plc |
Catena Media and Synthomer Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Catena Media and Synthomer Plc
The main advantage of trading using opposite Catena Media and Synthomer Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media position performs unexpectedly, Synthomer Plc 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 Synthomer Plc will offset losses from the drop in Synthomer Plc's long position.Catena Media vs. Uniper SE | Catena Media vs. Codex Acquisitions PLC | Catena Media vs. Ikigai Ventures | Catena Media vs. Heavitree Brewery |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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