Correlation Between Catalyst Media and Indutrade

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

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

Diversification Opportunities for Catalyst Media and Indutrade

0.23

Correlation Coefficient

Catalyst Media  Indutrade

Modest diversification

The 3 months correlation between Catalyst and Indutrade is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and Catalyst Media 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 Catalyst Media Group are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of Catalyst Media i.e., Catalyst Media and Indutrade go up and down completely randomly.

Pair Corralation between Catalyst Media and Indutrade

Assuming the 90 days trading horizon Catalyst Media Group is expected to under-perform the Indutrade. But the stock apears to be less risky and, when comparing its historical volatility, Catalyst Media Group is 1.09 times less risky than Indutrade. The stock trades about -0.05 of its potential returns per unit of risk. The Indutrade AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  25,415  in Indutrade AB on October 9, 2024 and sell it today you would earn a total of  3,315  from holding Indutrade AB or generate 13.04% return on investment over 90 days.

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

Catalyst Media Group  vs.  Indutrade AB

Catalyst Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Indutrade AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indutrade AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Catalyst Media and Indutrade

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

The idea behind Catalyst Media Group and Indutrade AB 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.