Correlation Between Catalyst Metals and Hansen Technologies

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

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

Diversification Opportunities for Catalyst Metals and Hansen Technologies

-0.21

Correlation Coefficient

Catalyst Metals  Hansen Technologies

Very good diversification

The 3 months correlation between Catalyst and Hansen is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Metals and Hansen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansen Technologies and Catalyst Metals 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 Metals are associated (or correlated) with Hansen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansen Technologies has no effect on the direction of Catalyst Metals i.e., Catalyst Metals and Hansen Technologies go up and down completely randomly.

Pair Corralation between Catalyst Metals and Hansen Technologies

Assuming the 90 days trading horizon Catalyst Metals is expected to generate 2.76 times more return on investment than Hansen Technologies. However, Catalyst Metals is 2.76 times more volatile than Hansen Technologies. It trades about 0.06 of its potential returns per unit of risk. Hansen Technologies is currently generating about 0.02 per unit of risk. If you would invest  115.00  in Catalyst Metals on September 19, 2024 and sell it today you would earn a total of  155.00  from holding Catalyst Metals or generate 134.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Catalyst Metals  vs.  Hansen Technologies

Catalyst Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Catalyst Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hansen Technologies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hansen Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hansen Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalyst Metals and Hansen Technologies

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

The idea behind Catalyst Metals and Hansen Technologies 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.