Correlation Between Mauna Kea and SA Catana

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

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

Diversification Opportunities for Mauna Kea and SA Catana

0.32

Correlation Coefficient

Mauna Kea  SA Catana

Weak diversification

The 3 months correlation between Mauna and CATG is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mauna Kea Technologies 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 Mauna Kea 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 Mauna Kea Technologies 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 Mauna Kea i.e., Mauna Kea and SA Catana go up and down completely randomly.

Pair Corralation between Mauna Kea and SA Catana

Assuming the 90 days trading horizon Mauna Kea Technologies is expected to generate 1.41 times more return on investment than SA Catana. However, Mauna Kea is 1.41 times more volatile than SA Catana Group. It trades about 0.05 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  16.00  in Mauna Kea Technologies on December 29, 2024 and sell it today you would earn a total of  1.00  from holding Mauna Kea Technologies or generate 6.25% return on investment over 90 days.

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

Mauna Kea Technologies  vs.  SA Catana Group

Mauna Kea Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mauna Kea Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Mauna Kea may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mauna Kea and SA Catana

The main advantage of trading using opposite Mauna Kea and SA Catana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mauna Kea 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 Mauna Kea Technologies 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.