Correlation Between Catalyst Media and Panasonic Corp

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

Diversification Opportunities for Catalyst Media and Panasonic Corp

-0.83

Correlation Coefficient

Catalyst Media  Panasonic Corp

Pay attention - limited upside

The 3 months correlation between Catalyst and Panasonic is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and Panasonic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panasonic Corp 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 Panasonic Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panasonic Corp has no effect on the direction of Catalyst Media i.e., Catalyst Media and Panasonic Corp go up and down completely randomly.

Pair Corralation between Catalyst Media and Panasonic Corp

Assuming the 90 days trading horizon Catalyst Media Group is expected to generate 4.27 times more return on investment than Panasonic Corp. However, Catalyst Media is 4.27 times more volatile than Panasonic Corp. It trades about -0.01 of its potential returns per unit of risk. Panasonic Corp is currently generating about -1.1 per unit of risk. If you would invest  7,600  in Catalyst Media Group on October 23, 2024 and sell it today you would lose (100.00) from holding Catalyst Media Group or give up 1.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	38.89%
Values	Daily Returns

Catalyst Media Group  vs.  Panasonic Corp

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.

Panasonic Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Panasonic Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Panasonic Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalyst Media and Panasonic Corp

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

The idea behind Catalyst Media Group and Panasonic Corp 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.