Correlation Between Catalyst Media and In Style

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

Diversification Opportunities for Catalyst Media and In Style

-0.46

Correlation Coefficient

Catalyst Media  In Style

Very good diversification

The 3 months correlation between Catalyst and ITS is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and in Style Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on in Style Group 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 In Style. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of in Style Group has no effect on the direction of Catalyst Media i.e., Catalyst Media and In Style go up and down completely randomly.

Pair Corralation between Catalyst Media and In Style

Assuming the 90 days trading horizon Catalyst Media Group is expected to under-perform the In Style. In addition to that, Catalyst Media is 1.1 times more volatile than in Style Group. It trades about -0.36 of its total potential returns per unit of risk. in Style Group is currently generating about 0.1 per unit of volatility. If you would invest  380,000  in in Style Group on September 26, 2024 and sell it today you would earn a total of  10,000  from holding in Style Group or generate 2.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Catalyst Media Group  vs.  in Style Group

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 latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

in Style Group

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days in Style Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, In Style is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Catalyst Media and In Style

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

The idea behind Catalyst Media Group and in Style Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.