Correlation Between CATLIN GROUP and One Media

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

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

Diversification Opportunities for CATLIN GROUP and One Media

-0.15

Correlation Coefficient

CATLIN GROUP  One Media

Good diversification

The 3 months correlation between CATLIN and One is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and One Media iP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Media iP and CATLIN GROUP 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 CATLIN GROUP are associated (or correlated) with One Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Media iP has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and One Media go up and down completely randomly.

Pair Corralation between CATLIN GROUP and One Media

Assuming the 90 days trading horizon CATLIN GROUP is expected to under-perform the One Media. But the stock apears to be less risky and, when comparing its historical volatility, CATLIN GROUP is 1.54 times less risky than One Media. The stock trades about -0.11 of its potential returns per unit of risk. The One Media iP is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  425.00  in One Media iP on December 29, 2024 and sell it today you would lose (10.00) from holding One Media iP or give up 2.35% of portfolio value over 90 days.

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

CATLIN GROUP   vs.  One Media iP

CATLIN GROUP

Risk-Adjusted Performance

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.

One Media iP

Risk-Adjusted Performance

Very Weak

Over the last 90 days One Media iP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, One Media is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CATLIN GROUP and One Media

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

The idea behind CATLIN GROUP and One Media iP 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.