Correlation Between Chicago Atlantic and Catalyst Metals

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

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

Diversification Opportunities for Chicago Atlantic and Catalyst Metals

-0.64

Correlation Coefficient

Chicago Atlantic  Catalyst Metals

Excellent diversification

The 3 months correlation between Chicago and Catalyst is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Chicago Atlantic Real and Catalyst Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Metals and Chicago Atlantic 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 Chicago Atlantic Real are associated (or correlated) with Catalyst Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Metals has no effect on the direction of Chicago Atlantic i.e., Chicago Atlantic and Catalyst Metals go up and down completely randomly.

Pair Corralation between Chicago Atlantic and Catalyst Metals

Given the investment horizon of 90 days Chicago Atlantic is expected to generate 12.4 times less return on investment than Catalyst Metals. But when comparing it to its historical volatility, Chicago Atlantic Real is 7.37 times less risky than Catalyst Metals. It trades about 0.05 of its potential returns per unit of risk. Catalyst Metals Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  54.00  in Catalyst Metals Limited on October 26, 2024 and sell it today you would earn a total of  156.00  from holding Catalyst Metals Limited or generate 288.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	74.09%
Values	Daily Returns

Chicago Atlantic Real  vs.  Catalyst Metals Limited

Chicago Atlantic Real

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chicago Atlantic Real are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Chicago Atlantic is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Catalyst Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Catalyst Metals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chicago Atlantic and Catalyst Metals

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

The idea behind Chicago Atlantic Real and Catalyst Metals Limited 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.