Correlation Between SA Catana and Burelle SA

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

Diversification Opportunities for SA Catana and Burelle SA

-0.32

Correlation Coefficient

SA Catana  Burelle SA

Very good diversification

The 3 months correlation between CATG and Burelle is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding SA Catana Group and Burelle SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burelle SA 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 Burelle SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burelle SA has no effect on the direction of SA Catana i.e., SA Catana and Burelle SA go up and down completely randomly.

Pair Corralation between SA Catana and Burelle SA

Assuming the 90 days trading horizon SA Catana Group is expected to under-perform the Burelle SA. In addition to that, SA Catana is 1.13 times more volatile than Burelle SA. It trades about -0.03 of its total potential returns per unit of risk. Burelle SA is currently generating about 0.04 per unit of volatility. If you would invest  31,900  in Burelle SA on December 30, 2024 and sell it today you would earn a total of  1,400  from holding Burelle SA or generate 4.39% return on investment over 90 days.

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

SA Catana Group  vs.  Burelle SA

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.

Burelle SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Burelle SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Burelle SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SA Catana and Burelle SA

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

The idea behind SA Catana Group and Burelle SA 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.