Correlation Between HSBC Holdings and Catalyst Media

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

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

Diversification Opportunities for HSBC Holdings and Catalyst Media

-0.57

Correlation Coefficient

HSBC Holdings  Catalyst Media

Excellent diversification

The 3 months correlation between HSBC and Catalyst is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings PLC 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 HSBC Holdings 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 HSBC Holdings PLC 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 HSBC Holdings i.e., HSBC Holdings and Catalyst Media go up and down completely randomly.

Pair Corralation between HSBC Holdings and Catalyst Media

Assuming the 90 days trading horizon HSBC Holdings PLC is expected to generate 0.92 times more return on investment than Catalyst Media. However, HSBC Holdings PLC is 1.08 times less risky than Catalyst Media. It trades about 0.08 of its potential returns per unit of risk. Catalyst Media Group is currently generating about -0.02 per unit of risk. If you would invest  43,127  in HSBC Holdings PLC on October 9, 2024 and sell it today you would earn a total of  35,323  from holding HSBC Holdings PLC or generate 81.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.22%
Values	Daily Returns

HSBC Holdings PLC  vs.  Catalyst Media Group

HSBC Holdings PLC

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC Holdings PLC are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, HSBC Holdings unveiled 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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with HSBC Holdings and Catalyst Media

The main advantage of trading using opposite HSBC Holdings and Catalyst Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings 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 HSBC Holdings PLC 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.