Correlation Between SA Catana and Dolfines SAS

Can any of the company-specific risk be diversified away by investing in both SA Catana and Dolfines SAS 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 Dolfines SAS 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 Dolfines SAS, you can compare the effects of market volatilities on SA Catana and Dolfines SAS 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 Dolfines SAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SA Catana and Dolfines SAS.

Diversification Opportunities for SA Catana and Dolfines SAS

0.03

Correlation Coefficient

SA Catana  Dolfines SAS

Significant diversification

The 3 months correlation between CATG and Dolfines is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SA Catana Group and Dolfines SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolfines SAS 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 Dolfines SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolfines SAS has no effect on the direction of SA Catana i.e., SA Catana and Dolfines SAS go up and down completely randomly.

Pair Corralation between SA Catana and Dolfines SAS

Assuming the 90 days trading horizon SA Catana Group is expected to under-perform the Dolfines SAS. But the stock apears to be less risky and, when comparing its historical volatility, SA Catana Group is 4.17 times less risky than Dolfines SAS. The stock trades about -0.03 of its potential returns per unit of risk. The Dolfines SAS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  141.00  in Dolfines SAS on December 30, 2024 and sell it today you would earn a total of  159.00  from holding Dolfines SAS or generate 112.77% return on investment over 90 days.

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

SA Catana Group  vs.  Dolfines SAS

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.

Dolfines SAS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dolfines SAS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Dolfines SAS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SA Catana and Dolfines SAS

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

The idea behind SA Catana Group and Dolfines SAS 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.