Correlation Between SA Catana and Bernard Loisea

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

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

Diversification Opportunities for SA Catana and Bernard Loisea

-0.47

Correlation Coefficient

SA Catana  Bernard Loisea

Very good diversification

The 3 months correlation between CATG and Bernard is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SA Catana Group and Bernard Loisea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bernard Loisea and SA Catana 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 SA Catana Group are associated (or correlated) with Bernard Loisea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bernard Loisea has no effect on the direction of SA Catana i.e., SA Catana and Bernard Loisea go up and down completely randomly.

Pair Corralation between SA Catana and Bernard Loisea

Assuming the 90 days trading horizon SA Catana is expected to generate 1.49 times less return on investment than Bernard Loisea. But when comparing it to its historical volatility, SA Catana Group is 1.94 times less risky than Bernard Loisea. It trades about 0.04 of its potential returns per unit of risk. Bernard Loisea is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  312.00  in Bernard Loisea on September 15, 2024 and sell it today you would earn a total of  10.00  from holding Bernard Loisea or generate 3.21% return on investment over 90 days.

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

SA Catana Group  vs.  Bernard Loisea

SA Catana Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SA Catana Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Bernard Loisea

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bernard Loisea are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bernard Loisea may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SA Catana and Bernard Loisea

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

The idea behind SA Catana Group and Bernard Loisea 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.