Correlation Between Catena Media and USWE Sports

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

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

Diversification Opportunities for Catena Media and USWE Sports

-0.86

Correlation Coefficient

Catena Media  USWE Sports

Pay attention - limited upside

The 3 months correlation between Catena and USWE is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media plc and USWE Sports AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE Sports AB and Catena 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 Catena Media plc are associated (or correlated) with USWE Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE Sports AB has no effect on the direction of Catena Media i.e., Catena Media and USWE Sports go up and down completely randomly.

Pair Corralation between Catena Media and USWE Sports

Assuming the 90 days trading horizon Catena Media plc is expected to under-perform the USWE Sports. In addition to that, Catena Media is 1.26 times more volatile than USWE Sports AB. It trades about -0.17 of its total potential returns per unit of risk. USWE Sports AB is currently generating about 0.14 per unit of volatility. If you would invest  700.00  in USWE Sports AB on September 1, 2024 and sell it today you would earn a total of  220.00  from holding USWE Sports AB or generate 31.43% return on investment over 90 days.

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

Catena Media plc  vs.  USWE Sports AB

Catena Media plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catena Media plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

USWE Sports AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USWE Sports AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, USWE Sports unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catena Media and USWE Sports

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

The idea behind Catena Media plc and USWE Sports 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.