Correlation Between Herald Investment and Catalyst Media

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

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

Diversification Opportunities for Herald Investment and Catalyst Media

-0.86

Correlation Coefficient

Herald Investment  Catalyst Media

Pay attention - limited upside

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

Pair Corralation between Herald Investment and Catalyst Media

Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.51 times more return on investment than Catalyst Media. However, Herald Investment Trust is 1.94 times less risky than Catalyst Media. It trades about 0.19 of its potential returns per unit of risk. Catalyst Media Group is currently generating about -0.05 per unit of risk. If you would invest  208,500  in Herald Investment Trust on October 20, 2024 and sell it today you would earn a total of  31,500  from holding Herald Investment Trust or generate 15.11% return on investment over 90 days.

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

Herald Investment Trust  vs.  Catalyst Media Group

Herald Investment Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Herald Investment Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Herald Investment exhibited solid returns over the last few months and may actually be approaching a breakup point.

Catalyst Media Group

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Herald Investment and Catalyst Media

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

The idea behind Herald Investment Trust and Catalyst Media 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.