Correlation Between Alkemy Capital and CATLIN GROUP

Can any of the company-specific risk be diversified away by investing in both Alkemy Capital 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 Alkemy Capital and CATLIN GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alkemy Capital Investments and CATLIN GROUP , you can compare the effects of market volatilities on Alkemy Capital 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 Alkemy Capital with a short position of CATLIN GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkemy Capital and CATLIN GROUP.

Diversification Opportunities for Alkemy Capital and CATLIN GROUP

-0.85

Correlation Coefficient

Alkemy Capital  CATLIN GROUP

Pay attention - limited upside

The 3 months correlation between Alkemy and CATLIN is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Alkemy Capital Investments and CATLIN GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATLIN GROUP and Alkemy Capital 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 Alkemy Capital Investments 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 Alkemy Capital i.e., Alkemy Capital and CATLIN GROUP go up and down completely randomly.

Pair Corralation between Alkemy Capital and CATLIN GROUP

Assuming the 90 days trading horizon Alkemy Capital is expected to generate 1.29 times less return on investment than CATLIN GROUP. In addition to that, Alkemy Capital is 4.42 times more volatile than CATLIN GROUP . It trades about 0.01 of its total potential returns per unit of risk. CATLIN GROUP is currently generating about 0.05 per unit of volatility. If you would invest  6,900  in CATLIN GROUP on September 21, 2024 and sell it today you would earn a total of  2,500  from holding CATLIN GROUP or generate 36.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Alkemy Capital Investments  vs.  CATLIN GROUP

Alkemy Capital Inves

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alkemy Capital Investments are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Alkemy Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

CATLIN GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CATLIN GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CATLIN GROUP is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alkemy Capital and CATLIN GROUP

The main advantage of trading using opposite Alkemy Capital and CATLIN GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alkemy Capital 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.

The idea behind Alkemy Capital Investments and CATLIN 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.