Correlation Between Boa Concept and SA Catana

Can any of the company-specific risk be diversified away by investing in both Boa Concept and SA Catana 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 Boa Concept and SA Catana into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boa Concept SA and SA Catana Group, you can compare the effects of market volatilities on Boa Concept and SA Catana 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 Boa Concept with a short position of SA Catana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boa Concept and SA Catana.

Diversification Opportunities for Boa Concept and SA Catana

-0.05

Correlation Coefficient

Boa Concept  SA Catana

Good diversification

The 3 months correlation between Boa and CATG is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Boa Concept SA and SA Catana Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SA Catana Group and Boa Concept 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 Boa Concept SA are associated (or correlated) with SA Catana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SA Catana Group has no effect on the direction of Boa Concept i.e., Boa Concept and SA Catana go up and down completely randomly.

Pair Corralation between Boa Concept and SA Catana

Assuming the 90 days trading horizon Boa Concept SA is expected to generate 1.55 times more return on investment than SA Catana. However, Boa Concept is 1.55 times more volatile than SA Catana Group. It trades about 0.11 of its potential returns per unit of risk. SA Catana Group is currently generating about -0.03 per unit of risk. If you would invest  1,725  in Boa Concept SA on December 28, 2024 and sell it today you would earn a total of  415.00  from holding Boa Concept SA or generate 24.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Boa Concept SA  vs.  SA Catana Group

Boa Concept SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boa Concept SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Boa Concept reported solid returns over the last few months and may actually be approaching a breakup point.

SA Catana Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days SA Catana Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SA Catana is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boa Concept and SA Catana

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

The idea behind Boa Concept SA and SA Catana Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.