Correlation Between Catcher Technology and General Interface

Can any of the company-specific risk be diversified away by investing in both Catcher Technology and General Interface 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 Catcher Technology and General Interface into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Catcher Technology Co and General Interface Solution, you can compare the effects of market volatilities on Catcher Technology and General Interface 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 Catcher Technology with a short position of General Interface. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catcher Technology and General Interface.

Diversification Opportunities for Catcher Technology and General Interface

0.93

Correlation Coefficient

Catcher Technology  General Interface

Almost no diversification

The 3 months correlation between Catcher and General is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Catcher Technology Co and General Interface Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Interface and Catcher Technology 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 Catcher Technology Co are associated (or correlated) with General Interface. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Interface has no effect on the direction of Catcher Technology i.e., Catcher Technology and General Interface go up and down completely randomly.

Pair Corralation between Catcher Technology and General Interface

Assuming the 90 days trading horizon Catcher Technology is expected to generate 1.96 times less return on investment than General Interface. But when comparing it to its historical volatility, Catcher Technology Co is 2.39 times less risky than General Interface. It trades about 0.2 of its potential returns per unit of risk. General Interface Solution is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4,980  in General Interface Solution on October 12, 2024 and sell it today you would earn a total of  480.00  from holding General Interface Solution or generate 9.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Catcher Technology Co  vs.  General Interface Solution

Catcher Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catcher Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

General Interface

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Interface Solution has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, General Interface is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Catcher Technology and General Interface

The main advantage of trading using opposite Catcher Technology and General Interface positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catcher Technology position performs unexpectedly, General Interface 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 General Interface will offset losses from the drop in General Interface's long position.

The idea behind Catcher Technology Co and General Interface Solution pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.