Correlation Between Financiere Marjos and SA Catana

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

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

Diversification Opportunities for Financiere Marjos and SA Catana

0.42

Correlation Coefficient

Financiere Marjos  SA Catana

Very weak diversification

The 3 months correlation between Financiere and CATG is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Financiere Marjos SA 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 Financiere Marjos 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 Financiere Marjos SA 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 Financiere Marjos i.e., Financiere Marjos and SA Catana go up and down completely randomly.

Pair Corralation between Financiere Marjos and SA Catana

Assuming the 90 days trading horizon Financiere Marjos SA is expected to generate 3.39 times more return on investment than SA Catana. However, Financiere Marjos is 3.39 times more volatile than SA Catana Group. It trades about 0.03 of its potential returns per unit of risk. SA Catana Group is currently generating about -0.01 per unit of risk. If you would invest  14.00  in Financiere Marjos SA on September 16, 2024 and sell it today you would lose (2.00) from holding Financiere Marjos SA or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.08%
Values	Daily Returns

Financiere Marjos SA  vs.  SA Catana Group

Financiere Marjos

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Financiere Marjos SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Financiere Marjos sustained solid returns over the last few months and may actually be approaching a breakup point.

SA Catana Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SA Catana Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SA Catana is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Financiere Marjos and SA Catana

The main advantage of trading using opposite Financiere Marjos and SA Catana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financiere Marjos 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 Financiere Marjos SA 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.