Correlation Between Catalyst Media and MediaZest Plc

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

Diversification Opportunities for Catalyst Media and MediaZest Plc

0.63

Correlation Coefficient

Catalyst Media  MediaZest Plc

Poor diversification

The 3 months correlation between Catalyst and MediaZest is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and MediaZest plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaZest plc 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 MediaZest Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MediaZest plc has no effect on the direction of Catalyst Media i.e., Catalyst Media and MediaZest Plc go up and down completely randomly.

Pair Corralation between Catalyst Media and MediaZest Plc

Assuming the 90 days trading horizon Catalyst Media Group is expected to under-perform the MediaZest Plc. But the stock apears to be less risky and, when comparing its historical volatility, Catalyst Media Group is 1.2 times less risky than MediaZest Plc. The stock trades about -0.18 of its potential returns per unit of risk. The MediaZest plc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  7.50  in MediaZest plc on December 2, 2024 and sell it today you would lose (0.50) from holding MediaZest plc or give up 6.67% of portfolio value over 90 days.

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

Catalyst Media Group  vs.  MediaZest plc

Catalyst Media Group

Risk-Adjusted Performance

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 conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MediaZest plc

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Catalyst Media and MediaZest Plc

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

The idea behind Catalyst Media Group and MediaZest plc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.