Correlation Between Derichebourg and SA Catana

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

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

Diversification Opportunities for Derichebourg and SA Catana

0.07

Correlation Coefficient

Derichebourg  SA Catana

Significant diversification

The 3 months correlation between Derichebourg and CATG is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Derichebourg and SA Catana Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SA Catana Group and Derichebourg 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 Derichebourg are associated (or correlated) with SA Catana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SA Catana Group has no effect on the direction of Derichebourg i.e., Derichebourg and SA Catana go up and down completely randomly.

Pair Corralation between Derichebourg and SA Catana

Assuming the 90 days trading horizon Derichebourg is expected to generate 2.53 times less return on investment than SA Catana. In addition to that, Derichebourg is 1.21 times more volatile than SA Catana Group. It trades about 0.02 of its total potential returns per unit of risk. SA Catana Group is currently generating about 0.07 per unit of volatility. If you would invest  466.00  in SA Catana Group on October 7, 2024 and sell it today you would earn a total of  41.00  from holding SA Catana Group or generate 8.8% return on investment over 90 days.

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

Derichebourg  vs.  SA Catana Group

Derichebourg

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Derichebourg are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Derichebourg is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SA Catana Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SA Catana Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SA Catana may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Derichebourg and SA Catana

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

The idea behind Derichebourg and SA Catana 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.